Morgan Stanley takes a gamble

Morgan Stanley building

Morgan Stanley is double-daring Fed Chair Janet Yellen.

The New York Post reports that the investment bank, led by CEO James Gorman, has underwritten a roughly $1bn highly leveraged loan — one that rivals passed on — at a ratio of 7.5 times debt-to-earnings.

That’s 150 basis points over the Federal Reserve guideline designed to limit the amount of loans that banks extend to indebted companies, said a source at a rival bank. A basis point is one-hundredth of a percentage point.

Morgan Stanley is providing debt that will fund Stone Point Capital’s agreement to buy Alliant Insurance from KKR.

'Everyone looked at this (deal) and passed', the source told the Post.

To access the complete New York Post article hit the link below:

Morgan Stanley flouts Fed guidelines with risky $1B loan

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