Case | HBS Case Collection | 2008 (Revised from original 2008 version)
by Andre F. Perold and Erik Stafford
The leveraged loan market was in a crisis during the summer of 2007, following many years of low realized volatility (less than 4% per annum), an index of leveraged loans had fallen over 5% in the month of July. A sudden drop in capital market prices for an asset class can be caused by news affecting fundamental values; or by a widespread liquidity shock. The implication of a shock to fundamental value is that the price drop is permanent, whereas if the underlying cause of the price drop is caused by a liquidity event, the situation may represent a profitable investment opportunity. Investors must assess the likely cause of the recent price drops in the leveraged loan market and determine an appropriate investment strategy.
Keywords: History; Financial Liquidity; Investment; Financial Crisis; Market Transactions; Disruption; Decision Choices and Conditions; Competitive Strategy; Capital Markets; Crisis Management; Commercial Banking; Banking Industry; Financial Services Industry;
Citation:
Perold, Andre F., and Erik Stafford. "Leveraged Loans 2007." Harvard Business School Case 208-145, December 2008. (Revised from original April 2008 version.)
View Profile »View Publications »
Case | HBS Case Collection | 2013 (Revised from original 2012 version)
Grantham, Mayo, and Van Otterloo, 2012: Estimating the Equity Risk Premium
Samuel Hanson, Erik Stafford and Luis Viceira
Keywords: investment banking; Equity Valuation;
Supplement | HBS Case Collection | 2013
Grantham, Mayo, and Van Otterloo, 2012: Estimating the Equity Risk Premium (CW)
Samuel Gregory Hanson, Erik Stafford and Luis M. Viceira
Case | HBS Case Collection | 2012
Lin TV Corp
David Scharfstein, Erik Stafford and Joel Heilprin
Keywords: valuation; Acquisitions; Synergy; broadcasting; Entertainment; Entertainment and Recreation Industry; North and Central America;