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Weekly Leveraged Loan Market Update

Real Estate

Weather the Storm

  • Despite volatility throughout the broader financial markets, U.S. leveraged finance markets had a relatively active week in terms of new issuance
    • High-yield market had over $15.0 billion of issuance, the largest weekly total in over two years
    • Loan market saw 21 transactions price for ~$17.2 billion in volume, with only three meaningfully increasing pricing
      • Alongside equities, leveraged finance secondary markets sold off
        • LCD’s Flow Name Loan Index declined 23 bps from 99.61 to 99.38
        • LCD’s Flow Name High-Yield Bond Index declined 86 bps from 101.08 to 100.22

                CIT Bottom Line
                Leveraged finance markets remained active during a week of uncertainty around global trade relations.

                CIT Weekly LoanDex®: A Middle Market Health Gauge

                Weekly LoanDex

                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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