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A Busy Week for US Leveraged Loan Market as Issuers as Investors Eye Year-End

us leveraged finance issuance

Loan issuance by non-investment grade borrowers totaled a hefty $20 billion last week, as the U.S. leveraged loan market looks to sprint toward year-end, capping off what already is a record year of activity.

Last week’s loan activity was the most since the $25.8 billion the week of Sept. 8, according to LCD.

So far in 2017 U.S. leveraged loan issuance has totaled nearly $487 billion, topping the full-year record of $456 billion set in 2013. These numbers take into account only institutional issuance – higher -priced, riskier credits sold to non-bank investors such as CLOs, pensions funds, and hedge funds, for example. Leveraged loan issuance has soared throughout 2017 as institutional investors look to work through the roughly $12 billion in cash that has built up in U.S. loan funds and ETFs this year, according to Lipper, largely in anticipation of rising interest rates earlier in 2017.

The highest-profile transaction to emerge last week was a $3.725  billion credit backing Sinclair Broadcast Group‘s acquisition of Tribune Media. 

The other component of the leveraged finance market, high yield bonds, also was busy last week, with $9.8 billion of transactions priced. Most visible here is a $1 billion offering for cereal maker Post Holdings. The deal redeems more expensive debt and backs the acquisition of Bob Evans Farms.

U.S. high yield issuance in 2017 totals $255 billion (not including the $4 billion in transactions launched today), easily topping the $229 billion completed during all of 2016.- Staff reports

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