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9/9/2019

Weekly Leveraged Loan Market Update

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Kickoff

  • The loan market had a busy return from Summer with $17.3 billion of new deals launching last week
    •  Some of the largest deals are refinancings for Dell Technologies (BB+ / Ba1) and ADT (B+ / B1), at $4.0 billion and $3.3 billion, respectively
    • Nine of the 15 transactions were for M&A ($6.4 billion of volume)
    • Price talk on the large corporate single-B rated LBO deals ranges from L+400-475
        • Secondary market was generally unphased, with the LCD Flow Name Index average bid increasing 10 bps to 99.33
          • Higher quality credits remain in high demand – at 205 bps, the gap between BB and single-B institutional spreads is well above the 12-month average of 125 bps


                Bottom Line
                The loan market is back to work as investors work to take down a fulsome post-Labor Day slate of issuance.


                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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