Credit risk associated with large, syndicated bank loans remains moderate, which includes a decrease in the percentage of loans that deserve management’s close attention, according to a report issued Monday by federal banking agencies.
According to the three agencies, the Shared National Credit (SNC) report for 2025 shows that credit risk trends continue to reflect the effects of borrowers’ ability to manage higher interest expenses and other macroeconomic factors.
The report, the agencies said, shows that the percentage of loans deserving management’s close attention (that is, “non-pass” loans rated “special mention” and “classified”) decreased to 8.6% of total commitments from 9.1% in 2024.
“The decline is primarily due to growth in new commitments rather than an underlying improvement in credit quality,” the report assets.
It notes that U.S. banks hold 45% of all SNC commitments, but only 22% of non-pass loans, down slightly from the prior year. Nearly half of total SNC commitments are leveraged, and leveraged loans comprise 81% of non-pass loans, the report states.
The report reflects the examination of SNC loans originated on or before June 30, 2025. The reviews, the agencies said, focused on leveraged loans and stressed borrowers from various industry sectors and assessed aggregate loan commitments of $100 million or more that are shared by multiple regulated financial institutions.
The portfolio for the report included 6,857 borrowers, totaling $6.9 trillion in commitments, an increase of 6% from 2024, according to the agencies.
Leave a Reply