Category Archives: Mutual Funds

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at 5:23pm

Cash inflows to loan mutual funds see largest level in 8 weeks

Retail-cash inflows into bank loan mutual funds and exchange-traded funds totaled $1.24 billion for the week ended May 22, according to Lipper FMI. This is a breakout inflow, the largest in eight weeks, and it maintains the sawtooth pattern that has developed over that span.

This latest result is higher than the $871 million from last week as well as the $1.03 billion in the week prior. It’s the 49th consecutive positive reading for a total inflow over that span of $28.4 billion. With that, the four-week trailing average rises to $993.3 million, from $960.8 million last week and $940.5 million the week prior.

ETFs accounted for about 19% of the inflow, at $241 million, which is the second highest dollar amount inflow for exchange traded funds.

Looking at results in the year to date, inflows are $21 billion, with $18 billion to mutual funds and $2.96 billion directed towards ETFs. For comparison, net cash inflows over the same period a year ago totaled $1.9 billion, with the comparable breakdown of $1.45 billion and $438 million, respectively.

Total assets of the weekly reporter sample were $67 billion at the end of the latest observation period, which after stripping out the inflow shows an increase of about $17.1 million due to market conditions. Total assets are up $25 billion in the year-to-date, for a 60% expansion. – Jon Hemingway

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at 3:29pm

After torrid start in 2013, CLO issuance eases; YTD volume: $32.1B

After a record-setting first quarter, CLO issuance has downshifted noticeably. Indeed, during the four weeks ended May 15, CLO volume averaged $897 million per week, less than half the $1.9 billion weekly issuance seen in January and February. Year-to-date CLO issuance now totals $32.1 billion

The reason for the recent slowdown is three-fold:

  1. Managers pulled forward a fair amount of CLO activity from April to March to beat the FDIC rule that mandates that banks apply higher capital requirements to AAA CLO paper
  2. Scarce collateral
  3. Tightening collateral spreads that result in thinning equity arbitrage

 

This analysis is part of an LCD News story, available to subscribers, that also details

  • Average CLO liability/new-issue asset spreads
  • Premium: blended new-issue spread vs. weighted average liabilities cost
  • Average secondary market bid, BB, B loans

 

 

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at 11:17am

Weekly CLO pipeline rises to $13.73B, according to S&P

Over the past week, the pipeline of CLOs in various stages of the rating process but for which final ratings have not yet been assigned increased to $13.73 billion, from $11.58 billion last week, according to a report from S&P’s Structured Finance Ratings Group.

All told, S&P expects $30 billion of new vehicles to close based on deals in the pipeline, versus $27 billion last week. On the other side of the ledger, optional redemptions for CLOs based on notices received by S&P now stand at roughly $10 billion, which is unchanged from last week.

 

Headline CLO statistics (May 14):

  • MTD issuance: $1.9 billion from four managers, versus $1.1 billion from three managers from April 1-14
  • YTD issuance: $32.1 billion from 59 managers, versus $11.6 billion from 25 managers in the year-ago period
  • LTM issuance: $74.4 billion from 83 managers, versus $21.9 billion from 35 managers in the 12 months ended May 14, 2012

 

This analysis is part of an LCD News story, available to subscribers, that includes the PDF from S&P detailing U.S. CLO closings and optional redemptions.

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at 8:10am

It’s a demand world: Loan market technicals favor issuers in April

In April, demand for loans again outpaced supply, adding further fuel to the market’s technical fire, which has led to plunging yields on new-issue loans (among other things).

All told, visible capital – including estimated retail inflows and CLO formation – exceeded net new supply during the month by $7.8 billion: $10.4 billion to $2.6 billion. That padded the year-to-date surplus to a super-sized $37.8 billion ($51.7 billion to $13.9 billion), or a still-formidable $28.3 billion including Heinz’s allocated but yet-to-be-funded $9.5 billion institutional LBO loan.

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at 4:14pm

Weekly CLO issuance hits $1.4B; YTD volume: $31.6B

weekly clo issuance

The cash-rich leveraged loan institutional investor market saw another $1.4 billion in inflows via U.S. CLO issuance over the past week, bringing the year-to-date CLO total to $31.6 billion from 64 deals (that’s a $493 million average deal size).

The weekly total is healthy compared to recent weeks (indeed, there were no vehicles issued the week ended April 24), but lags the torrid pace set during March.

The largest CLO this week was a $507 million vehicle for Benefit Street Partners (Providence Equity). The others: a $413 million deal for Neuberger Berman and a $490 million vehicle via Babson Capital.

Looking forward, it appears CLO activity will carry on, at least in the near term. There are some $11.6 billion of CLOs in various stages of the ratings process, but which have not yet received final ratings, according to S&P’s Structured Finance Ratings Group.

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at 4:09pm

Amid flood of investor cash, leveraged loan yields hit lowest point in decade

As the U.S. leveraged loan market continues to see a steady stream of investor cash inflow, yields on new-issue leveraged loans have reach their lowest point since before the 2008 market meltdown. Indeed, yields (to maturity) on double-B rated new issues neared 3% at  the end of April while single-B loans were yielding roughly 5%.

About that buyside demand. Loan mutual funds have seen 46 straight weeks of investor cash inflows totaling $25.3 billion, putting issuers firmly in the drivers seat. In April alone visible capital – those inflows and CLO formation – exceeded net issuance by a hefty $7.8 billion.

This analysis is part of an LCD News story, available to subscribers, that also details

  • Supply vs demand (change in inflows/outstandings)
  • Historical secondary bid of leveraged loans
  • Repricing volume – leveraged loans
  • M&A volume – leveraged loans
  • Institutional M&A forward calendar
  • “Repricings 2.0″

 

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at 4:38pm

High-yield funds increasing exposure to leveraged loans

High-yield funds increased their exposure to leveraged loans during the back half of 2012, based on a review of 20 large open-end and closed-end loan funds by LCD.

The funds under review grew loans to, on average, 8.3% of assets under management during the reporting period ended Dec. 31, 2012, or Feb. 28, 2013, from 7.5% six months earlier. All told, the share of loans is up two percentage points over the past two years.

Applying this increase to the entire universe of high yield funds – which now stands at $293 billion in the U.S. according to Lipper – suggests that these players have increased their loan book by as much as $12 billion, to $24 billion, since late 2010, when total high yield AUM stood at $193 billion.

This analysis is taken from an LCD News story, available to subscribers, that also details

  • Relative value players’ share of primary loan market (chart)
  • Share of loan AUM by 20 high yield funds (.xls)
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at 12:58pm

CLO Issuance Slides To $4B In April After Booming March

CLO issuance 5.13

After a busy month of March, CLO issuance in the U.S. slowed noticeably in April, to just $4 billion via nine deals. The April CLO activity brings year-to-date volume in the sector to $30.1 billion.

While that’s a healthy $7.5 billion monthly average, the pace of collateralized loan obligation vehicles has dropped off. In March there was nearly $11 billion in issuance via 22 deals.

CLOs are special-purpose investment vehicles set up to hold and manage pools of leveraged loans. You can read more about CLOs in LCD’s online Loan Market Primer (it’s free).

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at 5:13pm

Loan mutual funds, ETFs see 45th straight week of inflows

Retail-cash inflows into bank loan mutual funds and exchange-traded funds totaled $1.11 billion for the week ended April 24, according to Lipper FMI. That’s an expansion from $790 million last week and it’s the 45th positive reading for a huge inflow streak totaling $24.5 billion.

ETFs accounted for about a third of the inflow, at $354 million. That is the largest measurement of ETF inflow against mutual fund inflow this year, and, in fact, the largest such reading since the week ended Oct. 31, which showed also 32% of the flow.

The four-week trailing average dips to $936 million, from $973 million last week and $1.16 billion the week prior.

Looking at results in the year to date, inflows are $17 billion, with $14.8 billion to mutual funds and $2.2 billion directed towards ETFs. For comparison, net cash inflows over the same period a year ago totaled $1.2 billion, with the comparable breakdown $956 million and $274 million, respectively.

Total assets of the weekly reporter sample were $60.8 billion at the end of the latest observation period, which after stripping out the inflow shows an increase of about $23 million, or essentially an immeasurable gain due to market conditions. Total assets are up $15.8 billion in the year-to-date, for a 38% expansion. – Matt Fuller