Investor appetite in the U.S. leveraged loan market was on full display last month.
Credits backing dividends and recapitalizations, practically non-existent in the first quarter of the year, made a serious comeback in May, with $7.6 billion of activity during the month, up from $2.5 billion in April.
The May tally is the most for dividend activity since the $10.8 billion last July.
Dividend credits – through which an issuer takes on debt to fund a cash distribution to a private equity sponsor or shareholders – are a good gauge of how hot the leveraged loan market is: The greater the investor appetite for loan paper, the more willing lenders are to undertake transactions that can weaken a company’s balance sheet.
You can read more about how dividend loans work here, in LCD’s Loan Market Primer/Almanac.
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This chart is part of LCD’s monthly Technicals Analysis, written by Kerry Kantin. It is available to LCD News subscribers at www.lcdcomps.com, LCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.