Discussed this month:
- While M&A volume has been fairly chunky so far this year, overall loan supply has been lumpy, with January and April delivering especially low monthly totals. Looking ahead, there is a full pipeline packed with take-private and M&A transactions, including deals from Merlin Entertainments and Parques Reunidos.
- There has been a more even balance between M&A/buyout and opportunistic deals in 2019 compared to last year, when M&A transactions dominated the picture. Opportunistic deals could come to the fore once the current slate clears.
- On a rolling three-month average, primary spreads for euro single-B loans have tightened slightly over the last two readings.
- CLO volume is running higher YTD than last year, at €20.2B versus €19.2B. As for spreads, triple-A pricing is steady on an average rolling measure, and amid some recent tight individual prints the arbitrage appears to be working for managers.
- Bond yields are currently running higher than TLB yields, with the former asset class boosted by the ECB’s recent announcement on QE, and investor discipline here likely to be in the spotlight as the fourth quarter unfolds.
- U.K. issuance is healthy despite the noise around Brexit. The country sits third in the league table (topped by France and the U.S.), accounting for roughly 11% of total loan volume — though that supply hasn’t given a commensurate boost to sterling issuance, which can carry a premium and is seen as less liquid.
More S&P Global video and audio resources are available here.
Taron Wade heads up LCD’s European Research efforts. Chris Porter is Head of Loan Recovery & CLO Business Development, S&P Global.
Please feel free to contact Chris if you’d like a particular topic discussed in next month’s video.
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