The 2023 review revealed increased SNC credit risk, primarily attributed to higher interest rates and challenges in certain industry sectors.
Leveraged loans, comprising nearly half of total SNC commitments, exhibited high credit risk due to weak structures and aggressive repayment assumptions.
Leveraged loans represented 46% of $6.4 trillion in total commitments and represent a disproportionately high percentage of special mention and classified exposures.
The focus industries for 2023 included Technology, Telecom, Media, Health Care, Pharmaceuticals, Real Estate, and Transportation Services, all showing varying levels of special mention and classified commitments.
U.S. and foreign banks held the largest share of SNC commitments, while nonbanks held the majority of special mention and classified loans, particularly in non-investment grade term loans identified as leveraged by agent banks.
In conclusion, the 2023 Shared National Credit Program review revealed an increase in overall SNC credit risk, especially in leveraged loans and specific industry segments.
Factors contributing to increasing SNC credit risk in 2023
The increase in special mention and classified commitments is driven by declining credit quality in Technology, Telecom, and Media and the Healthcare and Pharmaceutical industry segments.
