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1/13/2020

Weekly Leveraged Loan Market Update

Back in Action

  • The first full week of 2020 saw 10 deals launch for a total of $14.0 billion of volume
    • Reprices comprised 50% of deal count and 74% of volume
    • Westinghouse Electric Company (B / B2) is in market with a reprice of its $3.0 billion TLB, seeking to lower pricing from L+3.50% to L+3.00-3.25%
    • Loan funds recorded a net inflow of $453.3 million, breaking a 15 week streak of outflows that totaled $6.6 billion
      • The average bid of LCD’s Flow Name Index increased roughly 20 bps last week with single-B names leading the way


                    Bottom Line
                    Borrowers kick off 2020 by attempting to capitalize on friendly market conditions, with a flurry of repricings launching.


                    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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