Much of that increase is attributable to larger syndicated credits, though there are some indications of softening in the credit quality of middle-market borrowers. In response to this rise, banks have written down assets to estimated net realizable values and replenished reserves for expected problems through loan loss provision expenses.
A common theme for many of the problem credits has been significant leverage employed to expand businesses during times of ebullient economic and market conditions. Many of these credits were originated during a period of relaxed lending standards that did not adequately account for the susceptibility of the borrower to weakening sectoral or economic conditions.