European Leveraged Finance Market Analysis – February 2011

It was a good start to the year for the European Leveraged finance market, though investor cash still greatly outweighed syndicated loan and high yield bond deal flow. In the analysis: loan returns, loan/high yield bond prices, new-issue volume, default rates, more.

Welcome to s p’s european low market video overview detailing leverage finance trends and activity during january 2011. i’m suchit gupta a member of s p’s leveraged commentary and data team a unit of s p that is not affiliated with s p ratings for the next few minutes i’ll walk you through a review of recent loan and how you’ll bond market trends in europe before

Winding up with themes to watch for in february 2011. before we start please know you can follow lcd on twitter facebook can join more than 4 700 contacts in lcd’s leveraged loan group on linkedin the links to follow lcd are in the info section on our youtube channel you can also download the slides for this video at slideshare.net before getting down to business

Some fine print this disclaimer courtesy parent company standard and poor’s and mcgraw-hill covers all the bases please read it at your leisure in january the market picked up where it left off at the end of 2010. leveraged loan issuance for january 2011 stood at 2.7 billion euros while high-yield bond issue instead of 4.1 billion euros in the secondary market

Loans finished the month at 98.69 while high-yield bonds closed the month at 104.28 the s p european leveraged loan index the le had a positive return of 2.71 x currency for the month of january investors still have cash coming in through repayments which they have to deploy and are still not able to deploy quick enough even with the new issue calendar picking

Up both for loans and high-yield bonds improving fundamentals were seen in the default rates both on the principal amount and an issuer account as they eased again at the end of december focusing on the secondary loan market this chart details the average price of lcd’s european loan flow name composite a measure of the 18 largest most liquid loans consisting of

10 issuers since 2002. the secondary loan market was up a point for the month of january to close at 98.69 the average bid is now at a three and a half year high the last time the average bid crossed 98.7 was in july 2007. just when the securitization market seized up from the fallout from the two bear stearns funds this next chart details the average price of

Lcd’s european high-yield flow name composite a measure of the 12 most liquid high-yield issues since the beginning of the year 2010. the high-yield market rose 63 basis points to close the month at 104.28 this next chart details the monthly return of the le a broad measure of european loan market returns that lcd calculates the european loan market posted a gain

Of 2.71 positive for january 2011. up from 1.85 in december this is the highest month per month gain for the le since january 2010. now from the secondary we turn to the primary this graph details new issue volume for both leveraged loans and high yield bonds new issuance for leveraged loans during the month stood at 2.7 billion euros while high-yield issuance

Stood at 4.1 billion euros default rates continue to slide downwards the default rate by principal amount decreased to 2.04 at the end of december from 2.59 in november 2010 the default rate by issuer count also decreased to 4.42 at the end of december 2010 from 5.24 at the end of november 2010. in summary the markets had a good start in january both in primary

And in the secondary markets sponsored to sponsor transactions continue to contribute more than its fair share of the new issue market sponsors are keen to realize gains on some of their investments as well as deploy their large reserves loan arrangers are taking advantage of strong demand from the institutional market by having transactions only going through

Senior syndication and bypassing general syndication altogether and we’re seeing further continuation for bond for loan takeouts amends to extend as well as ipos as companies address their maturity concerns that brings us to the end of our overview i hope you found it informative we’ll update the analysis each month and plan to have analysis of other specific

European market segments going forward check out lcd’s youtube page for other video analysis of the leverage finance market including u.s loan market wrap-ups for january and february the link to the page is in the description for this video for more information on lcd news or research in europe you can contact anna cheney you can email her by clicking on the

Link in the info box thanks very much we’ll see you soon

Transcribed from video
European Leveraged Finance Market Analysis – February 2011 By LCDcomps