U.S. leveraged loans are following up on their best January since 2009 with a solid February, with the asset classes returning 0.64%, according to the S&P/LSTA Loan Index. Of course, the recent performance follows a dismal December, when loans lost a heart-stopping 2.54% , its worst performance in seven years, amid serious volatility in the equities markets and general unease about the global economic picture.
The loan market has stabilized as retail investors have slowed their retreat from the asset class.
In December, loan mutual funds and ETFs saw roughly $12.2 billion of net withdrawals. That figure lessened to $4.4 billion in January, according to Lipper. While outflows are continuing this month, they’re easing even more. Withdrawals totaled a relatively slim $472 during the week ended Feb. 13, though that was the thirteenth straight outflow for the asset class, per Lipper.
Of note, loan ETFs saw a roughly $246 million inflow last week, the first such movement since early last month.
Another indication of the recent loan market rebound. There’s actual green (denoting a bid for secondary assets) per BAML/Instinct’s leveraged loan market trading platform – Tim Cross
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.