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Weekly Leveraged Loan Market Update

Tag for article:Real Estate

No Summer Slump

  • Following the holiday week, activity in the primary market picked up where it left off
    • 18 news deals launched for a total of $16 billion of volume
    • Sinclair Broadcast Group came to market with $4 billion of acquisition financing, the third largest transaction of 2019
      • Investor demand for loans remains strong, especially for higher quality credits
        • Loan fund outflow streak extends to 34 weeks, but CLO issuance chugs along – YTD volume of $66 billion is well above the historical average for the same period
        • According to LCD, the gap between BB and single-B institutional spreads has increased by 50 bps over the past 12 months from 130 bps in July 2018 to 180 bps as of last week

            Bottom Line
            The loan market remains busy heading into the dog days of summer.

            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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