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7/20/2020

Weekly Leveraged Loan Market Update

Summer Doldrumsn

  • Six deals launched in the primary market last week for a total of $4.9 billion
    • To support a dividend recapitalization and refinancing, Epicor (B- / B3) launched a $2.8 billion financing, inclusive of a seven year covenant-lite $1.9 billion first lien term loan talked at L + 4.25% at 97.50 – 98.00 and an eight year covenant-lite $825.0 million second lien term loan talked at L + 7.75% – 8.00% at 98.00
    • Tosca (B / B2) launched a $526.5 million first lien term loan talked at L + 4.75% – 5.00% at 97.00 to finance an acquisition and refinance its debt
          • Secondary market strengthened as the average bid of LCD’s Flow Name Index rose 14 bps to 94.45
            • Institutional loan forward calendar stands at just $11.2 billion


                            Bottom Line
                            The syndicated leveraged loan market remains relatively quiet as the calendar turns to the dog days of summer.


                            Weekly LoanDex®: A Middle Market Health Gauge

                            LoanDex


                            YTD LoanDex® Tracker

                            LoanDex Tracker


                            LoanDex® Model Drivers

                            Broader Market Sentiment
                            Broader market sentiment links the volatility of macroeconomic indicators, monetary and fiscal policy, and political events to the leveraged loan market. Macroeconomic momentum, in the context of prevailing business cycles, is a key indicator for investor confidence and required security yields. Quantifying systematic risk, especially tail-end risk, is the first step to forecast leverage loan yields and volume trends.

                            Loan Market Technicals
                            Loan market technicals are a snapshot of liquidity based on the current and trailing supply/demand dynamics.  CIT's model factors net loan flows, adjusted new-money volume and other independent variables to quantify surplus / deficit liquidity. Periods of excess liquidity are frequently characterized by eroding credit discipline and tightening clearing yields as investors compete for scarce assets, whereas lenders exercise more influence during periods reflective of constrained market demand. In addition to the current technical equation, CIT monitors the trailing supply/demand relationship to quantify sideline liquidity

                            Loan Market Secondary Support
                            Secondary market volatility influences investor confidence and relative value in the primary market. CIT's model quantifies the secondary market support by tracking secondary loan price movement with an emphasis on normalized deviation metrics. 

                             

                            Disclaimer: The information contained herein has been compiled from a variety of sources believed to be reliable.  We do not guarantee such information or make any representation as to its accuracy.  This publication is intended to provide general information regarding capital markets and financing matters and is not intended nor should it be construed, to provide legal, accounting or financial advice.

                            Source: S&P's Leveraged Commentary & Data, Thomson Reuters LPC, Bloomberg, Capital IQ, Moody's, S&P Credit Portal

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