The average bid of LCD’s flow-name composite fell 32 bps over the past few trading sessions, to 97.20% of par, from 97.52 on Oct. 1. Today’s drop marks the fifth-consecutive drop in the average bid, for a total decline of 128 bps over the 2.5-week span.
The average bid remains at its lowest level since December 2014, and of note, none of the 15 names in the sample are bid at par.
The composite remains biased towards the downside, with 12 loans lower, one unchanged and two higher; however, the two advancers gained a mere eighth of a point from the previous reading. The decliners, meanwhile, ranged from 0.125-1.75 points. Avaya’s typically volatile TLB-7 (L+525, 1% LIBOR floor) was responsible for the 1.75-point drop.
After a downcast session Friday, the market remains very choppy even as high-yield has clawed back some losses. While some loans have recovered from lows touched Friday, others continue to slide.
Traders continue to keep a close eye on the primary market, though there’s little clarity around clearing yields. Amid the recent volatility, several M&A/LBO transactions have gone into overtime and remain in price discovery, while three opportunistic transactions have been withdrawn all together.
With the average loan bid falling 32 bps, the average spread to maturity gained nine basis points, to L+461.
By ratings, here’s how bids and the discounted spreads stand:
- 99.04/L+383 to a four-year call for the nine flow names rated B+ or higher by S&P or Moody’s; STM in this category is L+377.
- 94.44/L+610 for the six loans rated B or lower by one of the agencies; STM in this category is L+568.
Loans vs. bonds
The average bid of LCD’s flow-name high-yield bonds advanced 146 bps, to 93.56% of par, yielding 8.05%, from 92.10 on Oct 1st. The gap between the bond yield and discounted loan yield to maturity stands at 371 bps. – Staff reports
- October: The average flow-name loan dropped 52 bps from the final September reading of 97.72.
- Year to date: The average flow-name loan climbed 28 bps from the final 2014 reading of 96.92.
- Bids slip: The average bid of the 15 flow names tumbled 32 bps, to 97.20% of par.
- Bid/ask spreads tighter: The average bid/ask spread tightened two basis points, to 36 bps.
- Spreads grow: The average spread to maturity – based on axe levels and stated amortization schedules – increased nine basis points, to L+461.