Discussed this month:
- European loan issuance so far in 2019 is down roughly 25–30% on the same period last year, though 2018 saw record loan supply, while a strong September in both regions this year has boosted the respective 3Q totals.
- Of this volume there was a high percentage of buyouts in Europe in September, whereas on the other side of the Pond, supply was dominated by refinancings over the month.
- LCD’s rolling 3M average single-B primary spread for loans revealed a sharp divergence between the U.S. and European markets in September, with the measure rising for the former region, and turning south in the latter.
- There was bifurcation in the U.S. market as double-B deals broadly went very well, allowing borrowers to achieve downward flexes, whereas single-B deals were harder to place, with some from this cohort having to sweeten terms.
- Looking more closely at price flexes in Europe, in September all loans that were flexed moved pricing downwards.
- Secondary pricing is flying high, with the share of the European Leveraged Loan Index (ELLI) trading at par or higher up at roughly 60% in September, and the percentage of those at 101 and above also increasing.
- There is stronger demand for high-yield bonds in the U.S. market, with LCD data showing the share of deals structured as first-lien-plus-HY-bonds is at the highest level since 2013, as borrowers seek to lock-in lower rates.
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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