latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/leveraged-loan-news/as-specter-of-rate-cuts-grows-investors-retreat-from-leveraged-loan-asset-class content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

In This List

As specter of rate cuts grows, investors retreat from leveraged loan asset class

Fed rally & default fears bring bifurcation back to leveraged loans

Industry-Specific Losses Stand Out In Leveraged Loan Market As COVID-19, Oil Fears Globalize

Loan Downgrades Are the Biggest Concern for the European CLO Market

Europe’s Leveraged Loan Issuers Draw on Revolving Credits to Preserve Liquidity


As specter of rate cuts grows, investors retreat from leveraged loan asset class

Retail investors pulled $1.36 billion from U.S. loan funds during the week ended March 27, the largest outflow since the week ended Jan. 2. This marks the nineteenth straight outflow for a total of $23.6 billion over that span, according to Lipper data.

The acceleration in the retreat from the asset class comes as the chances of rate hikes in 2019 – a scenario that traditionally benefits floating-rate assets such as leveraged loans – dims. Indeed, the loan market now sees a roughly 63% chance of a cut in rates by year-end, according to CME. That's a decided switch in sentiment from only recently. 

Leveraged Loan Fund Flows chart

This latest reading dwarfs recent outflows. In fact, the four-week trailing average on March 20 was the closest to positive it had been since Nov. 14, at negative $334 million. With this outflow it is now negative $665 million, the steepest level since Feb. 20.

ETFs packed a wallop this week with a $756 million outflow, the largest on record. Mutual fund outflows hit a five-week high, at $601.3 million.

The change due to market conditions during the week was also negative, by $419 million, the third week out of the past four that it has been in the red.

Year to date, including the week ended Jan. 2, retail investors have withdrawn a net $10.1 billion from U.S. loan funds. Assets at the loan funds now total $83.8 billion, of which $9.4 billion (11%) come via ETFs, according to Lipper. —Jon Hemingway

Try LCD for Free! News, analysis, data

Follow LCD on Twitter.

LCD comps is an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.