Major U.S. and European banks are facing tougher times in the riskiest parts of the loan market.
The biggest U.S. lenders, including Bank of America (BAC.N) and Citigroup (C.N), wrote down $1 billion in the second quarter on leveraged and bridge loans as rising interest rates made it tougher for banks to offload debt to investors and other lenders.
Bank of America said it took mark-to-market losses related to leveraged finance positions in the second quarter.
Chief Financial Officer Alastair Borthwick said the market turmoil and abrupt slowdown in the second quarter sparked a downturn in leveraged finance markets, causing a number of deals to get marked down.
Citigroup Inc (C.N) wrote down $126 million in the second quarter.
CFO Mark Mason said leveraged finance was under considerable pressure, but noted that Citigroup was not a big player in the market.
