Lien Services Overview
There are several sources detailed below that show that lien loans are indeed a type of leveraged loans. The services provided by Wolters Kluwer help banks and other big players in the lien loan market manage and monitor their outstanding liens. Hence, banks and other players in the leveraged loan market are their client/potential clients, not their competitors. Below, you will find more details.
ANSWERS TO CONCERNS RAISED ABOUT THE ORIGINAL REQUEST
1) Can you please tell me where the researcher found that liens are also a type of “leveraged loan”? Can we back that statement?
Yes, we can back the statement. However, it is important to note that the term "leveraged loans" has several definitions and different metrics on which it is judged, so a precise list of the different types of leveraged loans is unavailable. However, first and second lien loans are crucial types of leveraged loans, judging by several trusted sources.
First, a Reuters article about the second-lien loans states that: "the repricing wave that has swept through the US leveraged loan market is gathering momentum in the riskier second-lien market as tumbling institutional term loan yields open the door to issuers seeking to cut borrowing costs further down the capital structure." The statement indirectly shows that lien loans are considered a type of leveraged loan.
Secondly, American Capital Senior Floating, an investment management company, states that its portfolio is "composed primarily of diversified investments in first lien and second lien floating rate loans to large market, U.S. based companies (collectively, “Leveraged Loans”)." That quote also shows that first and second lien loans are collectively grouped as leveraged loans.
Also, according to Leveraged Loans, a website dedicated to providing information about leveraged loans, second-liens "are really just another type of syndicated loan facility." It is important to note that syndicated loans and leveraged loans are sometimes used interchangeably because "the size and complexity of characteristics inherent in many leveraged transactions require funding through the syndicated loan market." Simply put, many leveraged loans are generally syndicated because of the nature of the risk involved.
The relationship between leveraged loans and syndicated loans is further explained by Leveraged Loans: "a leveraged loan is a commercial loan provided by a group of lenders. It is first structured, arranged, and administered by one or several commercial or investment banks, known as arrangers. It is then sold (or syndicated) to other banks or institutional investors." As stated here, leveraged loans are generally syndicated.
Furthermore, according to Leveraged Commentary & Data (LCD), leverage loans is defined thus:
"it is rated BB+ or lower or it is not rated or rated ‘BBB-‘ or higher but has (1) a spread of LIBOR +125 or higher and (2) is secured by a first or second lien"
From the above, it is justified to say lien loans are a type of leveraged loans.
2) Can you tell me how the services provided by WOLTERS Kluwer as defined in the link I just sent you are relevant to the leveraged loan market players (the big banks)? Are they then Wolters Kluwer’s competitors?
Wolters Kluwer helps banks and other big players in the industry that give out first and second lien loans manage their lien. They do due diligence for those companies and advise them on their liens. They advise banks for instance on if a lien on which a loan is dependent is worthy. According to Wolter Kluwer, "CT Lien Solutions is a market leader in helping banks, mortgage companies, law firms, and equipment lenders and financiers stay on top of their liens." CT Lien Solutions is what is known today as Lien Solutions, which is the link you provided.
The reason services provided by Wolter Kluwer is important to players in the leveraged loan market is that players in the leveraged loan market need to monitor outstanding liens. This can be a "time-consuming, labor-intensive chore, often draining important resources from other tasks and slowing workflow efficiency." And if not done properly or if due diligence is not done before such leveraged loan players provide loans to businesses, large write-downs, losses, and increased foreclosures may be the result.
Wolters Kluwer, through Lien Solutions, helps provide additional due diligence to leveraged loan players that "help reveal hidden threats such tax liens, judgments, pending litigation and UCCs that haven’t been properly indexed by the jurisdiction."
So leveraged loan market players such as banks are NOT their competitor, but their clients and potential clients. They help them manage and monitor their outstanding liens.
To wrap up, lien loans are a type of leveraged loan. Wolters Kluwer, through Lien Solution, is not in the business of providing lien loans but help banks and other lenders manage, monitor, and perform due diligence on outstanding liens.