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Weekly Leveraged Loan Market Update

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More of the Same

  • Refinancings drove market activity in October as higher rated leveraged loan issuers took advantage of unique market conditions
    • October refinancing volume was up 73% from last year
    • Last week multiple BB-rated issuers launched refinancings with pricing of L+1.75%
    • Secondary market remains highly bifurcated – according to LCD, the average bid for performing BB-rated credits is 98.94 versus 95.87 for performing single-B names
    • Two CLOs printed last week with AAA-tranche pricing of L+1.32% and L+1.36%, respectively

                Bottom Line
                Higher quality leveraged loan issuers continue to capitalize on strong investor demand for BB-rated paper.

                Weekly LoanDex®: A Middle Market Health Gauge

                Weekly LoanDex Tracker

                YTD LoanDex® Tracker

                Weekly 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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