Banks loans are debt that institutional markets can invest in. They can trade like bonds, but with different documentation. These are created when a company borrows money from a bank, and the bank then sells some of its exposure from that loan to the market.
HMW: When companies go to borrow money, they can borrow from the bank or they can issue bonds. Those are the two main ways they borrow money. And big corporations usually borrow both from the bank and from the market — they’ll issue bonds. Now, if they are not as high in credit quality, the banks can’t hold that much of the loan on their books, and so they’ll sell it to the institutional market. So that’s where the publicly traded bank loans are loans where the bank actually generates the loans (they lend the money) and then they sell some of their exposure to the market. So then those bank loans trade just like bonds. So it’s the same kind of thing, it’s just under different documentation.