The USD leveraged loan market has grown substantially over the past decade. The S&P UBS USD Broad Leveraged Loan Index has seen its amount outstanding grow by 82% over the past decade, with a par amount of roughly USD 1.48 trillion as of Dec. 31, 2025 (versus USD 812 billion a decade earlier). The market size is roughly on par with the USD high yield market—however, the USD 1.5 trillion included in the iBoxx USD High Yield Developed Markets Index is only 13% greater than where it was a decade earlier (see Exhibit 1).
Several factors have contributed to the loan market's relative growth. Centralized loan obligation (CLO) issuance has expanded significantly, creating sustained institutional demand for floating-rate loan assets. Simultaneously, private equity sponsor activity—leveraged buyouts, refinancings and dividend recapitalizations—has favored the loan market's flexibility and speed of execution compared to the public bond issuance process.
High yield bonds and leveraged loans both represent sub-investment grade credit, but they differ in key structural respects. High yield bonds are typically fixed rate and unsecured, carrying meaningful duration and interest rate sensitivity. Leveraged loans are floating rate and senior secured, with coupons that reset periodically based on a reference rate such as SOFR. This floating-rate structure results in negligible duration—loan returns are driven primarily by credit spread movements rather than rates. The seniority and collateral backing of loans also positions them higher in the capital structure, which has historically translated to higher recovery rates in default scenarios.
The S&P UBS USD Liquid Leveraged Loan Index
The S&P UBS USD Liquid Leveraged Loan Index selects the 100 most trade-efficient loans from the broader benchmark universe. Eligibility requires a minimum facility size of USD 500 million and sufficient pricing depth, measured by the number of contributing dealers and their quote frequency. Final selection is determined by liquidity scores from S&P Global Market Intelligence’s Evaluated Bond Pricing service, which synthesizes multiple metrics including bid-offer spreads, quote frequency and market depth. The result is an index that tracks the broader loan market while focusing on constituents where price discovery and execution are most efficient.
Despite holding only around 100 loans versus the broader benchmark's larger universe, over the decade ending Dec. 31, 2025, the S&P UBS USD Liquid Leveraged Loan Index maintained a 97% daily return correlation with the S&P UBS USD Broad Leveraged Loan Index (see Exhibit 2). This tight relationship suggests that representative loan market beta is available through a more concentrated, tradable subset.
