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Leveraged loan returns: Loans gain 0.03% today; YTD return is 2.07%

Loans gained 0.03% today after gaining 0.03% yesterday, according to the LCD Daily Loan Index.

The S&P/LSTA US Leveraged Loan 100, which tracks the 100 largest loans in the broader Index, gained 0.01% today.

In the year to date, loans overall have gained 2.07%.

A full xls of the Daily Index is available to subscribers. 

LCD Daily Loan Index – March 28, 2013

TOTAL RETURNS

All

Perf. Loans

L100

BB

B

CCC

For 3/28/13      0.03%      0.03%       0.01%

 0.00%

 0.04%

      0.04%

For 3/27/13      0.03%      0.03%       0.03%

 0.01%

 0.03%

     0.16%

           
Month-To-Date 3/28/13

 0.78%

     0.82%

  0.80%

0.50%

0.77%

    2.91%

12/31/12 – 3/28/13

2.07%

     2.18%

 2.12%

1.36%

2.37%

  5.15%

12/31/11 – 3/28/12

3.66%

     3.71%

 4.29%

2.64%

4.92%

   2.17%

Source: S&P/LSTA Leveraged Loan Index.

 

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AMR merger with US Airways approved, but $20M CEO severance/bonus on hold

American Airlines won bankruptcy-court approval to merge with US Airways at a hearing in Manhattan this morning, but Judge Sean Lane shot down a proposed $20 million severance payment to AMR CEO Tom Horton.

Lane made his ruling after a lengthy back-and-forth between the U.S. Trustee in the case and AMR’s lawyers regarding the proposed severance package for Horton, consisting of $10 million in cash and $10 million in stock. Although creditors anticipate a full recovery as a result of the merger – an outcome that Judge Lane called a “truly tremendous result” – the U.S. Trustee objected that the proposed bonus violates the Bankruptcy Code and should not be granted.

In his ruling, Lane clarified that the proposed severance package was not off the table for good, but he would not approve it today as part of the merger.

Skadden partner Jack Butler, representing the official committee of unsecured creditors in the case, said the payment to Horton – consisting of $10 million in cash and $10 million in stock – was labeled a severance payment, but is in fact “much more than that.” The $20 million figure incorporates a number of incentives that the committee preferred be rolled into a single payment. Butler did not elaborate on each of the incentives in play.

Following an extended lunch break during which negotiations between AMR’s lawyers and the Trustee took place out of court, AMR said it was prepared to add yet another threshold to the severance payment. The bonus was already contingent on approval of a reorganization plan and completion of the merger, but AMR would also agree to subjecting the payment to a vote by the new board of directors of the merged company. AMR lawyer Stephen Karotkin, a partner at Weil, Gotshal & Manges, said doing so would make the board accountable to its new shareholders, putting the decision well outside the realm of the Bankruptcy Code.

The U.S. Trustee disagreed, calling the bonus issue “incredibly troubling.” A lone American Airlines pilot was among the parties to speak at today’s hearing, reading a prepared statement that decried the large bonus and general lack of leadership among company management over the past decade. He proposed an alternative offer for Horton: $500,000 and free coach tickets for life.

The airlines have said they expect the $11 billion merger deal to close in the third quarter of this year, a timetable that could be met with a plan filed by or near the end of May.

Judge Lane today also granted the company’s request for a final extension of its exclusive right to file a reorganization plan, through May 29, and to solicit votes on a plan, through July 29. The extension will give AMR time to formulate and propose a Chapter 11 plan that will implement the merger with US Airways, the company said in its motion seeking exclusivity.

American has not yet revealed when it will actually file its plan, but has said it is currently “in the process of formulating” it. AMR lawyer Stephen Karotkin told Judge Lane at one point during today’s hearing that “between now and confirmation of a plan will likely be six months.” – John Bringardner

 

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Leveraged loan returns: Loans gain 0.03% today; YTD return is 2.04%

Loans gained 0.03% today after gaining 0.03% yesterday, according to the LCD Daily Loan Index.

The S&P/LSTA US Leveraged Loan 100, which tracks the 100 largest loans in the broader Index, gained 0.03% today.

In the year to date, loans overall have gained 2.04%.

A full xls of the Daily Index is available to LCD subscribers. 

LCD Daily Loan Index – March 27, 2013

TOTAL RETURNS

All

Perf. Loans

L100

BB

B

CCC

For 3/27/13      0.03%      0.03%       0.03%

 0.01%

 0.03%

      0.16%

For 3/26/13      0.03%      0.03%       0.03%

 0.02%

 0.03%

     0.13%

           
Month-To-Date 3/27/13

 0.76%

     0.79%

  0.79%

0.50%

0.73%

    2.87%

12/31/12 – 3/27/13

2.04%

     2.15%

 2.10%

1.36%

2.33%

  5.11%

12/31/11 – 3/27/12

3.58%

     3.63%

 4.18%

2.58%

4.82%

   2.04%

Source: S&P/LSTA Leveraged Loan Index.

 

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1Q Loan Investor Market: CLOs, Funds Dominate Leveraged Loan Mart Amid Investor Inflows

In the first quarter, asset managers’ share of leveraged loan allocations jumped to a record 90.3%, from 84.8% in 2012, amid an onslaught of institutional loan refinancings, which dominated primary activity during the opening months of the year.primary loan market allocation

Within the institutional investor segment, bountiful CLO issuance and inflows to loan mutual funds allowed these traditional investor constituencies to tighten their grip on primary institutional loan allocations. In sum, their share increased to 81.6% between January and March: 60.4% for CLOs and 21.2% for loan funds. That is the highest reading since 2002, up from 78.1% in the fourth quarter and 70.6% for all of 2012.

As reported, that CLO issuance continues at a healthy pace, with roughly $2.5 billion of vehicles priced in each of the last three weeks.

This chart is part of an LCD News analysis available to subscribers. Other charts in that analysis:

  • Pro-rata share of total volume
  • Share of new-issue institutional loan allocations by investor type
  • CLO volume
  • CLO share of primary institutional market for highly leveraged loans
  • Spreads and funding costs for CLOs
  • Number of fund managers that issued a CLO
  • Total net asset value of prime funds
  • Prime-fund outstandings and percent
  • Relative-value players’ share of primary institutional market
  • Number of loan investor groups


– Steve Miller

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Leveraged loan returns: Loans gain 0.03% today; YTD return is 2.01%

Loans gained 0.03% today after gaining 0.03% yesterday, according to the LCD Daily Loan Index.

The S&P/LSTA US Leveraged Loan 100, which tracks the 100 largest loans in the broader Index, gained 0.03% today.

In the year to date, loans overall have gained 2.01%.

A full xls of the Daily Index is available to LCD subscribers. 

LCD Daily Loan Index – March 26, 2013

TOTAL RETURNS

All

Perf. Loans

L100

BB

B

CCC

For 3/26/13      0.03%      0.03%       0.03%

 0.02%

 0.03%

      0.13%

For 3/25/13      0.03%      0.03%       0.05%

 0.01%

 0.03%

     0.17%

           
Month-To-Date 3/26/13

 0.73%

     0.76%

  0.76%

0.48%

0.70%

    2.70%

12/31/12 – 3/26/13

2.01%

     2.12%

 2.07%

1.34%

2.30%

  4.94%

12/31/11 – 3/26/12

3.52%

     3.57%

 4.10%

2.52%

4.76%

   1.99%

Source: S&P/LSTA Leveraged Loan Index.

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Connor, Clark & Lunn Capital Markets launches loan fund, managed by ING

Toronto-based structured financial products investment firm Connor, Clark & Lunn Capital Markets closed an IPO of a floating-rate non-investment grade corporate loan fund aimed at generating a 6% yield.

An IPO of the ING Diversified Floating Rate Senior Loan Fund raised $177.7 million through the sale of 16 million Class A units for $160 million, listed on the Toronto Stock Exchange, and 1,771,467 Class U units for $17.7 million, a March 22 statement said. The agents have an over-allotment option, for 30 days after the close, for 971,024 more Class A Units.

The fund’s objectives are to generate tax-advantaged monthly cash distributions from returns on capital, preserve capital, and generate returns if short-term interest rates increase from a diversified portfolio of North American sub-investment-grade senior loans. A unit of ING Investment Management Co., Scottsdale, Arizona-based ING Senior Loan Group, will actively manage the loan portfolio.

Initially, the distribution target is expected at $0.05 unit per month for an annual yield of 6% on the unit initial price. The fund will not have a fixed distribution policy, but will deliver monthly distributions based on portfolio returns, actual and expected.

BMO Capital Markets will lead a syndicate of agents that will sell the fund’s units, comprising CIBC, RBC Capital Markets, TD Securities, GMP Securities, National Bank Financial Inc., Scotiabank, Canaccord Genuity, Macquarie Private Wealth, Raymond James, Desjardins Securities, Mackie Research Capital and Manulife Securities. – Abby Latour

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Leveraged loan returns: Loans gain 0.03% today; YTD return is 1.98%

Loans gained 0.03% today after gaining 0.02% on Friday, according to the LCD Daily Loan Index.

The S&P/LSTA US Leveraged Loan 100, which tracks the 100 largest loans in the broader Index, gained 0.05% today.

In the year to date, loans overall have gained 1.98%.

A full xls of the Daily Index is available to LCD subscribers. 

LCD Daily Loan Index – March 25, 2013

TOTAL RETURNS

All

Perf. Loans

L100

BB

B

CCC

For 3/25/13      0.03%      0.03%       0.05%

 0.01%

 0.03%

      0.17%

For 3/22/13      0.02%      0.02%       0.03%

 0.01%

 0.02%

     0.14%

           
Month-To-Date 3/25/13

 0.70%

     0.72%

  0.73%

0.46%

0.66%

    2.57%

12/31/12 – 3/25/13

1.98%

     2.09%

 2.04%

1.32%

2.27%

  4.81%

12/31/11 – 3/25/12

3.51%

     3.56%

 4.09%

2.51%

4.74%

   1.97%

Source: S&P/LSTA Leveraged Loan Index.

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Leveraged loan returns: Loans gain 0.02% today; YTD return is 1.92%

Loans gained 0.02% today after gaining 0.03% yesterday, according to the LCD Daily Loan Index.

The S&P/LSTA US Leveraged Loan 100, which tracks the 100 largest loans in the broader Index, gained 0.03% today.

In the year to date, loans overall have gained 1.92%.

A full xls of the Daily Index is available to LCD subscribers. 

LCD Daily Loan Index – March 22, 2013

TOTAL RETURNS

All

Perf. Loans

L100

BB

B

CCC

For 3/22/13      0.02%      0.02%       0.03%

 0.01%

 0.02%

      0.14%

For 3/21/13      0.03%      0.03%       0.04%

 0.02%

 0.05%

   -0.06%

           
Month-To-Date 3/22/13

 0.64%

     0.66%

  0.65%

0.42%

0.61%

   2.36%

12/31/12 – 3/22/13

1.92%

     2.02%

 1.97%

1.28%

2.21%

  4.59%

12/31/11 – 3/22/12

3.47%

     3.51%

 4.07%

2.46%

4.71%

   1.89%

Source: S&P/LSTA Leveraged Loan Index.

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Loan mutual funds rake in another $1.36B of investor cash; 2nd-largest haul ever

Data from EPFR Global show a $1.36 billion cash inflow to U.S. bank loan mutual funds and ETFs in the week ended March 20, by weekly reporters only. This is the 30th consecutive week with inflows to the asset class, for $17.2 billion over that span.

This is the second largest weekly inflow ever following $1.42 billion in the Feb. 13 week. It is up from $1.15 billion last week and above the $1.2 billion four-week trailing average. Inflows totaling at least $1 billion have now been recorded in six of the past seven weeks.

ETF inflows at $147 million were up from $100 million last week and represent about 11% of the total inflow.

Total inflow for the year-to-date is $11.4 billion, with ETFs contributing $1.3 billion, or 12% of the total.

Total assets of the weekly reporter sample were $62.3 billion at the end of the latest observation period, which after stripping out the inflow shows an increase of about $1.2 billion, or a gain of 2.03% due to market conditions.

The total inflow for 2012 was $7.77 billion, with positive readings recorded in 42 of the 52 weeks with a weekly average for the year of $149 million. Roughly $1.2 billion, or about 16% of that figure, is tied to ETF inflows (there are now two funds in the sample: the BKLN PowerShares Senior Loan Portfolio and Pyxis iBoxx Senior Loan ETF). – Jon Hemingway