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1/14/2019

Weekly Leveraged Loan Market Update

Real Estate
Insights

Stayin’ Alive

  • The primary market finally showed signs of life, with seven new deals launching over the past week
    • Opportunistic deals were a no-show, as the new deals consisted of three LBOs and four M&As
  •  The average LCD Flow Name Index bid increased to 98.15, up 286 bps from the week prior
    • Surpassed 98 for the first time since the last week of November
  • The seven-week streak of $1 billion-plus loan fund outflows was snapped this past week with a $327 million withdrawal


CIT Bottom Line
The loan market appears to have stabilized after a turbulent end to 2018.


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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