Queues at Rolex shops, London house prices and the soaring art market are often cited as indicators of an asset bubble. In the past month the rise in "cov-lite" loans - syndicated loans without the usual covenants that can protect lenders - has added a new flashing red light to the list of warning signs.

The latest to sound the alert was Harvey McGrath, chairman of Man Group, the FTSE 100 hedge fund manager, last week. He joined such big City names as Anthony Bolton, Fidelity's retiring star, and Nicholas Ferguson, who built up the private equity group SVG Ventures, now Permira. Many bankers and lawyers involved in putting leveraged loans together express amazement that lenders are willing to stump up cash on cov-lite terms.