December 2013, US Leveraged Loan Market Analysis

In November, new-issue activity pushed further into record territory. The S&P/LSTA Index posted a 0.49% gain as loan prices inched higher. The universe of S&P/LSTA Index loans grew $22B to a record $674 billion. Inflows accelerated. The loan default rate eased. Looking ahead, the calendar of new M&A-driven transactions remains light.

Welcome to s p capital iq’s monthly loan market update i’m steve miller a member of the leveraged commentary and data team over the next few minutes we’ll review recent market trends in preview the loan market rally continued in november amid positive investor sentiment and solid technical conditions in november new issue activity pushed further into record territory

For the first 11 months of the year issuers inked 565 billion dollars of new leverage loans surpassing the prior high of 535 billion from 2007. while muscular recap and refinancing activity pushed volume to new heights m a has lagged at 182 billion dollars in the year in november far short of 2007’s mark of 331 billion dollars the s p lsta index posted a 0.49

Gain in november as lone prices inched higher that brought returns for the first 11 months of the year to 4.8 percent down from 8.8 during the same period in two thousand twelve as this chart suggests loan prices have little room to run after the massive post-credit crunch gains of the last few years as a result 2013 has largely been a coupon clipping year for

Investors in the asset class the universe of s p lsta index loans grew 22 billion dollars in november to a record 674 billion dollars there was less here than meets the eye however subtracting out big executions from dell and hilton that allocated in september but funded into the index in november supply increased a more modest eight billion dollars during the month

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Inflows meanwhile accelerated retail investors put an estimated four billion dollars of new money to work in loan mutual funds according to data from lipper and public filings what’s more clo issuance jumped to 10.2 billion dollars the second largest reading since 2007. with technical conditions robust new issue clearing yields narrowed a bit in november spurring

An increase in repricing activity which climbed to a six-month high of 30 billion dollars switching gears the loan default rate east of 2.1 percent in november from 2.3 in october managers remain constructive on the near-term outlook on average they expect the rate to inch to 2.2 percent by year-end about one percentage point inside the historical average according

To lcd’s latest buy-side poll taken in mid-september looking ahead the calendar of new m a-driven transactions remain light with just 12.3 billion dollars of such product in the visible pipeline that may spur another round of recaps repricing and other issuer friendly transactions as 2014 unspools that brings us to the end of our overview for more information on

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December 2013, US Leveraged Loan Market Analysis By LCDcomps