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Leveraged loan funds see largest outflow since Aug. 2011, led by mutual funds

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Cash outflows from bank loan funds swelled to $1.66 billion during the week ended Oct. 22, up from a $946 million outflow in the previous week, according to Lipper. The reading reflects mutual fund outflows of $1.56 billion, plus a $98 million outflow from the exchange-traded fund segment, and it represents the largest outflow since the $2.12 billion recorded for the week ended Aug. 17, 2011.

The latest reading represents the 26th outflow in the past 28 weeks, for a net redemption of $16.8 billion over that span.

The trailing four-week average deepens to negative $1.22 billion from negative $897 million last week and negative $807 million two weeks ago. The four-week average surpasses the previous high reading of negative $944 million for the four weeks ended Aug. 24, 2011.

The year-to-date fund-flow reading pushes deeper into negative territory, at roughly $9.68 billion, based on a net withdrawal of $9.71 billion from mutual funds against a net inflow of $32 million to ETFs. In the comparable year-ago period, inflows totaled $46.65 billion, with 11% tied to ETFs.

The change due to market conditions was positive $322 million, versus total assets of $96.9 billion at the end of the observation period. The ETF segment comprises $7.4 billion of the total, or approximately 8%. – Joy Ferguson

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Leveraged loan fund outflows reach nearly $1B, led by mutual funds, 14th straight week of outflows

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Cash outflows from bank loan funds increased to $946 million during the week ended Oct. 15, according to Lipper. The reading reflects mutual fund outflows of $869 million plus a $76 million outflow from the exchange-traded fund segment.

The latest reading is an uptick from an outflow of $825 million last week and it represents the 25th outflow in the past 27 weeks, for a net redemption of $15 billion over that span.

The trailing four-week average deepens to negative $897 million per week, from negative $807 million last week and negative $686 million two weeks ago. This is the largest average since a negative $944 million reading for the four weeks ended Aug. 24, 2011.

The year-to-date fund-flow reading pushes deeper into negative territory, at roughly $8 billion, based on a net withdrawal of $8.2 billion from mutual funds against a net inflow of $131 million to ETFs. In the comparable year-ago period, inflows totaled $45.9 billion, with 11% tied to ETFs.

The change due to market conditions was negative $829 million, versus total assets of $98.3 billion at the end of the observation period. The ETF segment comprises $7.4 billion of the total, or approximately 8%. – Joy Ferguson

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CLO roundup: U.S. nears volume record as Europe AAAs see new low

The CLO market returned to form last week as eight managers printed deals in the U.S. and Europe, for a total of $3.88 billion, according to LCD. Of this, the U.S. priced six for $2.8 billion, while Europe priced two for just over $1 billion. Global volume stands at $110.56 billion in the year to date, according to LCD.

Year-to-date issuance in the U.S. is $95.87 billion from 177 deals, nearing the all-time high of $97.01 billion in 2006. Given the near-term pipeline, which holds at least six CLOs for roughly $3 billion, it’s highly likely the record will be broken this week. In the same period last year, issuance stood at $60 billion from 124 deals.

LCD subscribers can click here for full story, analysis, and the following charts:

  • Recent deals
  • European arbitrage CLO issuance and institutional loan volume
  • Deal pipeline
  • Global CLO volume


. - Sarah Husband

Follow Sarah on Twitter for the latest CLO market news and insight.

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Leveraged loan fund outflows grow to $1.44B, 4x increase, led by mutual funds

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Cash outflows from bank loan funds increased nearly fourfold, to $1.44 billion during the week ended Oct. 1, versus $382 million last week, according to Lipper. The recording is the largest outflow since the week ended Aug. 6, when $1.5 billion left loan funds.

The influence of bank-loan ETFs on this week’s number was 18%, or $262 million, versus an outflow of $48 million from ETFs last week.

There now have been 23 weeks of outflows over the past 25 weeks, for a total outflow of $13.3 billion over that span, which follows a record-shattering 95-week inflow streak that totaled $66.7 billion.

With this week’s large outflow, the trailing four-week average gaps out to a negative $686 million per week, from negative $435 million last week. This measure remains below the recent peak of negative $858 million from the week ended June 11.

The year-to-date fund-flow reading pushes deeper into negative territory, at $6.3 billion, based on a net withdrawal of $6.4 billion from mutual funds against a net inflow of $133 million to ETFs. In the comparable year-ago period, inflows totaled $45 billion, with 11% tied to ETFs.

The change due to market conditions was negative $126 million, versus total assets of $100.8 billion at the end of the observation period. The ETF segment comprises $7.5 billion of the total, or approximately 7%. – Joy Ferguson

 

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CLO roundup: Europe supply passes FY forecast, US pipeline builds

Europe saw the bulk of the action this week, pricing three new CLO transactions, against two for the U.S. market. The ABS East conference, taking place at the start of the week, dampened new-issue activity stateside, leaving the European CLO market to step into the spotlight on two counts: supply and spreads.

LCD subscribers can click here for full story, analysis, and the following charts:

  • Deal pipeline
  • US arbitrage CLO issuance and institutional loan volume
  • Global CLO volume

. - Sarah Husband

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Leveraged Loans: CLOs drive investor mart as retail remains in red

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In the third quarter, the investor base for new-issue leveraged loans grew even more dependent on CLO funding amid (1) retail outflows from loan funds and (2) ongoing reticence by banks and securities firms to play in loans in which they don’t have an arranger role.

Banks, in fact, were again bit players during the first three quarters of 2014, taking a record-low 9.9% of non-arranger allocations to leveraged loans, according to LCD’s analysis, down from 14.1% in 2013. Banks’ share in the third quarter was in line, at 9.8%.

LCD subscribers, please click here for full story, analysis, and the following charts:

  • Share of institutional volume rate four-B or higher
  • Number of loan investor groups
  • Visible inflows to the loan asset class
  • Primary market for institutional loans
  • Average AAA CLO spread
  • Share of S&P/LSTA Index bid below par and single-B YTM
  • Repricing volume
  • Primary market for institutional loans
  • Relative-value players’ share of allocations and high-octane volume
  • Primary allocations of 2014 institutional loans by investor type
  • Number of managers that issued a 2.0 CLO
  • Average CLO size
  • CLO and Index outstandings
  • CLO outstandings as a share of S&P/LSTA Index
  • CLO outstandings
  • Assets under management 2Q 2014


– Steve Miller

Follow Steve on Twitter for an early look at LCD analysis, plus market commentary.

 

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Leveraged loan default rate to remain low in months ahead: LCD survey

Managers expect loan defaults to remain scarce in the near future, according to LCD’s latest quarterly buyside survey, taken in early September.

On average, managers predicted that the lagging-12-month default rate of the S&P/LSTA Leveraged Loan Index will end 2014 at 0.78% by amount, versus 0.44% in August. (These figures exclude Energy Future Holdings. Including EFH, they are 3.88% and 3.34%, respectively.) Looking out to September 2015, managers expect the rate to climb to 1.38% (EFH will have fallen from the lagging 12-month rolls by then).

For LCD subscribers, please click here to access the complete story, analysis, and the following charts:

  • Earnings growth of S&P companies
  • Averaged cash-flow coverage of outstanding loans
  • Averaged leverage of large LBOs
  • Average (EBITDA-capex)/cash interest of large LBOs

– Steve Miller

Follow Steve on Twitter for an early look at LCD analysis, plus market commentary.

 

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CLO roundup: September gets off to slow start in both US, Europe

It’s been a tentative post-summer return for the CLO market with just three new issue CLOs pricing so far in the U.S. this month, and the Dryden XXVII tap providing Europe’s only new issue activity to date. Still, a number of transactions are expected to price this week, ahead of the IMN’s ABS East Conference in Miami next week (Sept. 21-23).

Global CLO issuance in 2014 stands at $97.71 billion, according to LCD.

LCD subscribers can click here for full story, analysis, and the following charts:

  • Deal pipeline
  • US arbitrage CLO issuance and institutional loan volume
  • European arbitrage CLO issuance and institutional loan volume


– Sarah Husband

 

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Leveraged loan funds see outflow for 9th straight week, modest ETF influence

Cash outflows from bank loan funds declined slightly to $342 million during the week ended Sept. 10, versus outflows of $435 million last week and $297 million two weeks ago, according to Lipper. The influence of bank-loan ETFs on this week’s number was 21%, as Lipper recorded a $70 million outflow from ETFs. This compares to a $20 million inflow into ETFs last week.

There now have been 20 weeks of outflows over the past 22 weeks, for a total outflow of $10.9 billion over that span, which follows a record-shattering 95-week inflow streak that totaled $66.7 billion.

The trailing four-week average narrows to negative $404 million per week, from negative $490 million last week. This measure remains below the recent peak of negative $858 million from the week ended June 11.

The year-to-date fund-flow reading pushes deeper into negative territory, at $3.9 billion, based on a net withdrawal of $4.3 billion from mutual funds against a net inflow of $459 million to ETFs. In the comparable year-ago period, inflows totaled $42 billion, with 11% tied to ETFs.

The change due to market conditions was a negative $308 million, versus total assets of $103.7 billion at the end of the observation period. The ETF segment comprises $8 billion of the total, or approximately 8%. – Joy Ferguson

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CLO roundup: Pipelines point to busy year-end for both US, Europe

After a busy summer, with both the U.S. and European CLO markets churning out new transactions in August, there is every indication that CLO issuance will remain strong all the way through to year-end.

Global CLO issuance in 2014 has now risen to $96.64 billion, according to LCD.

The U.S. remains the main driver of this total, printing $10.68 billion of volume from 20 deals in August, versus $13.39 billion from 23 deals in July and $13.78 billion in June, according to LCD. Note that refinancings are not included in these numbers.

LCD subscribers, please click here for full story, analysis and the following charts:

  • Global CLO volume (Jun 13-Sep 5)
  • US arbitrage CLO issuance and institutional loan volume
  • European arbitrage CLO issuance and institutional loan volume
  • Deal pipeline

– Sarah Husband