Category Archives: Economy

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at 9:03am

European Topical: Technicals shed light on liquidity picture

Technicals have been a major factor in this year’s market trends, with the liquidity picture one of the hardest to understand for many years.

LCD has put together a report to shed light on the technical picture, which it will update and run each month. The Institutional Loan Market Technicals report draws together key statistics around inflows and supply, based on ELLI outstandings, and will feature a series of slides including repayments versus new issues, CLO volume, bond-for-loan takeouts, and maturity schedules.

Demand for the latest loan transactions has been boosted by repayments over the past month or so. Repayments out of the S&P European Leveraged Loan Index (ELLI) surged to €6.7 billion in the month ended May 2, their highest level since May 2011 and greater than the first three months of 2013 combined. This brings the rolling three-month tally to €9.8 billion, and the corresponding quarterly repayment rate to an 18-month high of 9.2%, up from 4.3% in the first quarter.

 

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

  • Institutional loan market ledger
  • TLB clearing yields

 

– Staff reports

 

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at 4:38pm

Leveraged loan returns: Loans gain 0.02%; YTD return is 3.21%

Loans gained 0.02% today after gaining 0.02% 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 3.21%.

A full xls of the Daily Index is available to LCD subscribers, please click here.

LCD Daily Loan Index – May 21, 2013
TOTAL RETURNS

All

Perf. Loans

L100

BB

B

CCC
For 5/21/13      0.02%      0.02%       0.03%

 0.01%

  0.00%

     0.19%
For 5/20/13      0.02%      0.01%       0.02%

 0.00%

  0.01%

     0.13%
           
Month-To-Date 5/21/13

 0.47%

      0.44%

  0.54%

0.27%

0.36%

    1.96%
12/31/12 – 5/21/13

3.21%

      3.29%

  3.28%

2.01%

3.29%

  10.11%
12/31/11 – 5/21/12

4.14%

      4.23%

 4.15%

2.96%

5.25%

    3.89%

Source: S&P/LSTA Leveraged Loan Index.

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at 4:29pm

Leveraged loan returns: Loans gain 0.02% today; YTD return is 3.19%

Loans gained 0.02% today after gaining 0.01% 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 0.02% today.

In the year to date, loans overall have gained 3.19%.

A full xls of the Daily Index is available to LCD subscribers, please click here.

LCD Daily Loan Index – May 20, 2013
TOTAL RETURNS

All

Perf. Loans

L100

BB

B

CCC
For 5/20/13       0.02%       0.01%       0.02%

  0.00%

  0.01%

     0.13%
For 5/17/13       0.01%       0.01%       0.01%

  0.00%

  0.01%

     0.01%
             
Month-To-Date 5/20/13

 0.45%

       0.42%

  0.51%

0.26%

0.35%

     1.76%
12/31/12 – 5/20/13

3.19%

       3.27%

  3.25%

2.00%

3.28%

  9.89%
12/31/11 – 5/20/12

4.28%

       4.38%

  4.34%

3.11%

5.44%

     3.68%

Source: S&P/LSTA Leveraged Loan Index.

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at 5:06pm

Leveraged loan returns: Loans gain 0.01% today; YTD return is 3.14%

Loans gained 0.01% 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 3.14%.

A full xls of the Daily Index is available to subscribers, please click here.

LCD Daily Loan Index – May 17, 2013
TOTAL RETURNS

All

Perf. Loans

L100

BB

B

CCC
For 5/17/13      0.01%      0.01%       0.01%

 0.00%

  0.01%

    0.01%
For 5/16/13      0.03%      0.03%       0.03%

 0.01%

 -0.01%

     0.38%
           
Month-To-Date 5/17/13

 0.41%

      0.38%

  0.47%

0.23%

0.32%

    1.59%
12/31/12 – 5/17/13

3.14%

      3.23%

  3.21%

1.98%

3.25%

  9.71%
12/31/11 – 5/17/12

4.31%

      4.40%

 4.39%

3.14%

5.46%

    3.59%

Source: S&P/LSTA Leveraged Loan Index.

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at 1:57pm

Loan-fund assets grow 6% in April as records continue to fall

Assets under management of loan mutual funds grew by 6% in April, or $6.7 billion, to a record $116.8 billion, according to data from Lipper FMI, CEFConnect.com, and Yahoo! Finance.

It was the fourth straight month of muscular inflows for the asset classes. Indeed, between January and April, loan fund AUM grew by $26 billion, or 28.6%, from $96.5 billion at year-end.

 

 

 

 

 

 

 

 

 

 

 

As this chart illustrates, retail investors have embraced loans like never before.

 

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

  • Annual AUM growth
  • Average secondary yields

 

– Steve Miller

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at 12:12pm

EBITDA growth slows anew in 1Q as macro picture stabilizes

Cash-flow growth among leveraged loan issuers ratcheted lower again in the first quarter. On average, S&P/LSTA Index issuers that file publicly with the SEC posted a 6.8% year-over-year increase in EBITDA during the first three months of 2013, down from 8.3% in the fourth quarter, according to data from S&P Capital IQ.

The steady erosion in EBITDA growth since corporate profits bounced back after the great recession of late 2008/early 2009 is hardly unique to loan issuers, of course. S&P 500 issuers – a proxy for corporate America – reported average earnings growth of 5.5% in the first quarter, down from 7.5% from the prior period but up from 4.5% for all of last year, according to S&P Capital IQ’s Bob Keiser. Still, earnings growth has receded from the double-digit pace of 2010 and 2011.

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

  • EPS growth of S&P 500 companies
  • Average cash-flow coverage of outstanding loans

 

– Steve Miller

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at 4:46pm

Leveraged loan returns: Loans gain 0.03% today; YTD return is 3.13%

Loans gained 0.01% today after gaining 0.01% 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 3.13%.

A full xls of the Daily Index is available to LCD subscribers, please click here.

LCD Daily Loan Index – May 16, 2013
TOTAL RETURNS

All

Perf. Loans

L100

BB

B

CCC
For 5/16/13      0.03%      0.03%       0.03%

 0.01%

  -0.01%

    0.38%
For 5/15/13      0.01%      0.00%       0.00%

 0.01%

  0.01%

     -0.09%
           
Month-To-Date 5/16/13

 0.40%

      0.37%

  0.46%

0.24%

0.30%

    1.58%
12/31/12 – 5/16/13

3.13%

      3.22%

  3.20%

1.98%

3.23%

  9.70%
12/31/11 – 5/16/12

4.88%

      4.97%

 5.47%

3.48%

6.04%

    6.01%

Source: S&P/LSTA Leveraged Loan Index.

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at 4:26pm

Leveraged loan returns: Loans gain 0.01% today; YTD return is 3.10%

Loans gained 0.01% today after gaining 0.01% 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, was unchanged today.

In the year to date, loans overall have gained 3.10%.

A full xls of the Daily Index is available to LCD subscribers, please click here.

LCD Daily Loan Index – May 15, 2013
TOTAL RETURNS

All

Perf. Loans

L100

BB

B

CCC
For 5/15/13      0.01%      0.00%       0.00%

 0.01%

  0.01%

     -0.09%
For 5/14/13      0.01%      0.00%       -0.02%

 0.01%

 -0.02%

     0.08%
           
Month-To-Date 5/15/13

 0.37%

      0.34%

  0.43%

0.23%

0.31%

    1.20%
12/31/12 – 5/15/13

3.10%

      3.19%

  3.17%

1.97%

3.24%

  9.29%
12/31/11 – 5/15/12

5.01%

      5.11%

 5.67%

3.57%

6.20%

    6.21%

Source: S&P/LSTA Leveraged Loan Index.

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at 12:16pm

May 2013 European Leveraged Loan Market Analysis

May 2013 European Leveraged Loan Market Analysis

An overview of the past month:

  • Loan issuance was €6.7 billion in April 2013, while high yield issuance was €6.5  billion.
  • According to JP Morgan HY research: estimated inflows into European HY funds was €543 million for April. This brings year-to-date inflows at €2.9 billion.
  • Secondary markets were up, loan markets went up 72 bps points to finish the month at 100.58 while high yield markets were up 206 bps to finish the month at 104.63.
  • The S&P European Leveraged Loan Index (ELLI) finished the month up 0.88%.
  • Default rates stayed level.

Focusing on the secondary loan market, this chart details the average price of LCD’s European Loan flow name composite – a measure of the 12 largest, most liquid loans (consisting of 10 issuers) – since 2002.

Secondary loan prices rose 72 bps to finish the month at 100.58. The increase brings the average flow names up to a fresh peak since the beginning of July 2007. Since bottoming out at 60.23 at the end of 2008, the average has now recovered to pre-crisis levels, having added more than 40 points over the last 52 months. The current bid is now 324 bps higher than the final reading of 2012.

This next chart details the average price LCD’S European High Yield Flow name composite – a measure of the 12 most liquid high yield issues – since the beginning of the year 2010.

The high yield market finished the month at up 206 bps at 104.63, just 3 basis points shy of the 2013 high of 104.66 . The average bid is now 167 bps higher in the year to date, having ended 2012 at 102.96.

This chart details the monthly return of the ELLI, a broad measure of European loan market returns that LCD calculates. All returns are ex-currency unless otherwise stated.

The European loan market had a positive return of 0.88% for the month of April (for the week ending May 2nd), down from the 0.91% seen in March . This brings the year-to-date return to 3.50% versus 5.19% for the same period last year.

Now we turn from the secondary to the primary. This graph details new-issue volume for both leveraged loans and high-yield bonds.

April’s leveraged loan new-issue launch pad remained very similar to the prior month’s, consisting of a wave of opportunistic transactions with a tiny dash of buyouts. Out of the €6.7 billion total volume for the month, €5.7 billion came from refinancings, led by the jumbo €2.7 billion pro rata facilities for Schaeffler, and the €1.5 billion TLH and TLE-1 for Kabel Deutschland.  April’s high-yield bond tally reached €6.5 billion, falling a tad short of the roughly €7 billion total seen in each of the prior months. However, this reading by no means signifies a slowdown in issuance, as close to €2 billion of bonds priced in the first two days of May.  For the year to date, European borrowers raised €27.8 billion in the high-yield bond market, more than double the €13.5 billion seen at this time last year, and just €8.5 billion away from the full-year tally for 2012. If issuance continues at the same pace for the remainder of the year, 2013 can easily smash the 2010 record of €44.4 billion.

 

The default rate by principal amount stayed level at 5.9% at the end of April  while the default rate by issuer count fell to 7.1% at the end April from  at 7.2% at the end of March.

 

Themes to watch for going forward

  • CLOs emerge back on the landscape, according to LCD reports, there are 4 vehicles in the pipeline totaling €1.4 billion consisting of vehicles from Alcentra, Blackstone / GSO, Carlyle and ICG. So far this year, 3 vehicles have priced for a total of €964 million from managers Apollo, Cairn and Pramerica.
  • Further spread / yield compression is expected, as loan issuers use access to the high yield markets to reduce existing spreads.
  • Along with repricings, some sponsors are tabling dividend recap deals to take advantage of investor demand, both in loans and high yield.
  • Still strong demand for high yield bonds, so far this year, net inflows stand at €2.9 billion.
  • Bond for loan-take-outs will continue to keep pace as issuers address their maturity concerns.

 

A video of this presentation is available at:


http://youtu.be/Z9KZMgXSQ98

 

Slideshare download is available at:

http://www.slideshare.net/lcdcomps/may-2013-european-leveraged-loan-market-analysis

– Sucheet Gupte

 

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at 4:35pm

Leveraged loan returns: Loans gain 0.01% today; YTD return is 3.10%

Loans gained 0.01% today after gaining 0.01% 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, fell 0.02% today.

In the year to date, loans overall have gained 3.10%.

A full xls of the Daily Index is available to LCD subscribers, please click here.

LCD Daily Loan Index – May 14, 2013
TOTAL RETURNS

All

Perf. Loans

L100

BB

B

CCC
For 5/14/13      0.01%      0.00%       -0.02%

 0.01%

 -0.02%

    0.08%
For 5/13/13      0.01%      0.01%      0.00%

 0.01%

 0.01%

     0.01%
           
Month-To-Date 5/14/13

 0.37%

      0.34%

  0.43%

0.22%

0.30%

    1.29%
12/31/12 – 5/14/13

3.10%

      3.19%

  3.17%

1.96%

3.23%

  9.39%
12/31/11 – 5/14/12

5.05%

      5.15%

 5.78%

3.60%

6.28%

    6.15%

Source: S&P/LSTA Leveraged Loan Index.