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US Leveraged Loan Issuance: $11.1B Last Week

high yield bond issuance

U.S. leveraged loan issuance totaled $11.1 billion last week, following up on the $14.2 billion the previous week, according to LCD, an offering of S&P Global Market Intelligence. Year-to-date loan issuance totals $236 billion, compared to $264 billion during the same period one year ago. – Staff reports

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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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GreensLedge Prices $433M Anchorage Credit Funding CDO

GreensLedge Capital Markets today priced a $433 million CDO for Anchorage Capital Group, according to market sources.

Natixis Securities Americas was also a co-lead manager on the transaction.

Pricing details are as follows:

Anchorage CDO 2016-07-22

Similar to Fortress’s $633.6 million FDF Limited II, which priced on April 15, the transaction can hold up to 65% in second-lien loans and unsecured bonds.

The transaction will close on Aug. 29 with a non-call period ending on Oct. 28, 2018 and a reinvestment period ending on Oct. 28, 2021. The legal final maturity is on Oct. 28, 2033. — Andrew Park

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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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S&P: Growth in Global Credit, Leverage to Continue. Then: Slow Burn or ‘Crexit’?

corporate debt levels

S&P Global sees global corporate credit demand growing over the next few years, to $62 trillion by the end of the decade, including some $24 trillion in “new” debt (as opposed to refinancings).

At the same time, borrower credit quality is weakening , thanks largely to “monetary expansion” in various countries.

This combination of factors leads S&P to a pair of scenarios, with the assumption that a credit correction of some kind is inevitable:

  • A slow burn, where weak companies fall over gradually (this is the base case assumption)
  • “Crexit”: A system-wide credit contraction, prompted by a series of economic/political shocks. Brexit, for instance … – Tim Cross

 

The full report, Global Corporate Credit: Despite An Inevitable Credit Correction, Debt Demand Will Swell To $62 Trillion Through 2020, is available to S&P Global Credit Portal Subscribers. It was written by Terry Chan, Diego Ocampo, David Tesher, and Paul Watters. It details:

  • Global corporate credit demand, by country
  • New corporate credit demand
  • Corporate credit growth cycle
  • Debt/GDP vs Credit growth
  • Financial risk trends of global corporate sample
  • Distribution of FFO/debt risk categories, by country/industry

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Brexit Jitters End US Loan Fund Growth Streak at 3 Months

loan funds assets under management

After three months of grinding higher, US leveraged loan mutual fund assets under management reversed course in June, contracting by $900 million, to $111.45 billion, according to LCD and Lipper.

There are two main reasons for the mild decline. Amid the Brexit-related volatility in the month, funds experienced modest outflows. Mutual funds that report weekly to Lipper FMI posted a net outflow of $582 million for the four weeks ended June 29. Most of the outflows occurred in the final week of the month, when these funds posted a net $525 million withdrawal.

The other reason: leveraged loan secondary prices ended June down slightly, further nicking NAV. – Kerry Kantin

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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

 

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In Shadow of Brexit, Burgeoning European LBO Loan Market Proceeds with Caution

european lbo loan volume

U.K. buyouts accounted for only €2.33 billion of LBO volume across the leveraged loan market in 2016’s first half, versus €14.4 billion of supply for non-U.K. buyouts, according to LCD, an offering of S&P Global Market Intelligence.

Note the €14.4 billion is the largest first-half volume for non-U.K. LBOs since the turn of the decade, indicating that sponsors were either keen to raise financing ahead of the June 23 U.K. Brexit vote, or were simply not perturbed by it.

Sponsors expect LBO activity to continue into the second half of 2016, although the U.K.’s decision to leave the European Union has left market participants in a brave new world of financing, and the biggest obstacle to a pick-up in LBOs will be new valuations. – Nina Flitman

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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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US Leveraged Loan Issuance Rebounds, High Yield Bonds Emerge as Post-Brexit Markets Heat up

There is life in the new-issue U.S. leveraged finance market for the first time since the U.K. Brexit vote, thanks largely to a rapidly accelerating leveraged loan segment that is seeing opportunistic issuers come off the sidelines.

U.S. syndicated loan issuance last week totaled a relatively hearty $14.3 billion, up noticeably from $3.4 billion the previous week, according to LCD, an offering of S&P Global Market Intelligence.

US leveraged finance issuance“Summer’s here, and a technically driven loan market is heating up,” writes LCD’s Chris Donnelly, in his weekly market wrap-up. “Accounts that fretted about repricing activity in recent weeks saw a slew of mark-to-market deals and refinancings, all poised to capture investor demand.”

Indeed, there was a handful of sizeable credits last week, including a $2.2 billion refinancing from New Zealand-based packaging concern Reynolds Group and a $1.8 billion loan backing Revlon’s acquisition of Elizabeth Arden.

There was also a jumbo $4.25 billion loan backing the bankruptcy exit/DIP loan refinancing of Texas Competitive Electric Holdings, the largest leveraged loan bankruptcy ever (as TXU).

Year to date, U.S. leveraged loan issuance now totals $239 billion, compared to $247 billion at this point in 2015.

Along with increased issuance, U.S. loan funds last week saw their first inflow of investor cash in a month, according to Lipper.

The U.S. high yield bond market was less active, though it too saw its best week of issuance since the Brexit vote, logging $3.9 billion in deals, according to LCD. More might be in store.

“Investors have a significant amount of money to put to work on the heels of a five-week slowdown, big inflows to the asset class, and large coupon-payment dates having passed in June,” says Matthew Fuller, who covers the high yield bond market for LCD.

About those inflows: They totaled a whopping $4.35 billion last week, the second-largest weekly sum ever, according to Lipper.

Year to date U.S. high yield issuance totals $124 billion, down significantly from the $189 billion at this point last year.

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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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LCD’s Free Online US Loan Primer/Almanac Updated with 2Q Analysis

LCD’s popular online Loan Market Primer/Almanac has been updated to include second-quarter/first-half 2016 and historical U.S. analytical charts.

If you haven’t checked out the Primer, take a look. It’s a great promotion for the asset class and resource for newcomers or those interested in the leveraged loan market. We hope you’ll share it with anyone who might find it useful.

loan primer image 2

The Primer can be found at LeveragedLoan.com, LCD’s free website featuring select stories from LCD News, as well as loan market trends, stats, and analysis. The Primer also features great videos by Paddy Hirsch that explain how the senior secured loan and leveraged finance markets work.

Among the charts included with this release of the Primer:

The Loan Market Primer is one of LCD’s most popular pieces. Updated annually (print) and quarterly (online) to include emerging trends, it is widely used by originating banks, institutional investors, private equity shops, law firms, and business schools worldwide.

Here’s the Primer table of contents (see the sub-menus for each category online):

  • What is a Leveraged Loan?
  • Market Background
  • Leveraged Loan Purposes
  • How are Loans Syndicated?
  • Types of Syndications
  • The Bank Book
  • Leveraged Loan Investor Market
  • Public vs. Private Markets
  • Credit Risk – Overview
  • Syndicating a Loan – by Facility
  • Pricing a Loan – Primary Market
  • Types of Syndicated Loan Facilities
  • Second-Lien Loans
  • Covenant-Lite Loans
  • Lender Titles
  • Secondary Sales
  • Loan Derivatives
  • Pricing Terms/Rates
  • Fees
  • Original-Issue Discounts
  • Voting Rights
  • Covenants
  • Mandatory Prepayments
  • Collateral
  • Spread Calculation
  • Default/Restructuring
  • Amend-to-Extend

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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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After Month of Withdrawals, US Leveraged Loan Funds See Cash Inflow

us loan fund flows

U.S. leveraged loan funds recorded a net inflow of $136 million in the week ended July 13, according to the Lipper weekly reporters only. This is the first infusion of cash to the asset class after four weeks of outflows totaling $700 million.

Today’s reading was almost all ETF-related, at 98% of the sum, or $2 million to mutual funds and $134 million for ETFs. In contrast, the outflows of late have all been from mutual funds, with some ETF inflows filling in the withdrawals.

Whatever that might suggest about fast money, market timing, and hedging strategies, this week’s inflow narrows the trailing four-week average to negative $118 million per week, from negative $175 million a week ago.

Year-to-date outflows from leveraged loan funds now total $5.4 billion, based on outflows of $6.1 billion from mutual funds against inflows of $686 million to ETFs, or inverse 13%, according to Lipper.

The change due to market conditions this past week was positive $383 million on total assets of $59.9 billion at the end of the observation period, for a gain of approximately 0.6% for the week. ETFs represent about 11% of the total, at $6.5 billion. — Matt Fuller

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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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TPG Specialty urges TICC shareholders to vote for its board nominee

TPG Specialty Lending, the BDC that lends to middle market companies, stepped up its fight for rival TICC Capital today as the two sides geared up for a proxy battle.

In a letter dated July 13, TPG Specialty urged TICC Capital shareholders to vote in favor of board nominee T. Kelley Millet at TICC Capital’s annual meeting on Sept. 2. TPG Specialty has tried unsuccessfully to acquire TICC Capital. Millet is CEO of Banca IMI Securities Corp.

TPG is calling to end an ineffective investment advisory agreement between TICC Capital and TICC Management. TPG says TICC Capital shares have grossly underperformed the S&P 500 and the BDC Composite Index since TICC Capital’s IPO in 2003, driven by a 57% decline in NAV. In the meantime, TICC has paid fees of over $140 million to its external adviser and management.

TICC Capital has pursued an unsustainable dividend policy, paying a dividend far exceeding net investment income, TPG Specialty said.

“Do not be fooled! These payments are not comprised solely of investment returns; stockholders are being paid back in part with their own money,” the letter to TICC Capital shareholders said. “More importantly, this strategy has unfortunately resulted in almost irreversible value destruction of NAV per share that will only continue without quick and decisive action.”

TICC Capital has countered with its own board nominee, Tonia Pankopf, who is up for re-election this year. In a letter to its shareholders yesterday, TICC Capital sought support from shareholders to vote in favor of Pankopf and reject TPG Specialty’s plan to terminate its investment advisory agreement with TICC Management.

TICC Capital’s executive officers and directors together hold 5.7% of common stock, the proxy statement filed on July 12 showed. Ahead of the previous shareholder meeting, the board owned 1.8% of common stock, a proxy filed in April 2015 showed.

TICC Capital has also been fighting on another front. NexPoint Advisors, an affiliate of Highland Capital Management, submitted a proposal to cut fees and invest in TICC Capital. In the letter yesterday, TICC Capital told shareholders not to support any potential proposal from NexPoint.

TPG Specialty Lending’s investment portfolio reflects its ongoing interest in TICC. As of March 31, TPG owned 1.6 million TICC shares, representing 0.9% of its portfolio.

TPG has repeatedly said that TICC’s external manager has failed the BDC and, given the chance, TPG could improve returns for shareholders.

“We remain committed to affecting change at TICC,” co-CEO and Chairman Josh Easterly said in an earnings call in May. — Abby Latour

Follow Abby on Twitter @abbynyhk for middle-market deals, leveraged M&A, distressed debt, private equity, and more

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Download LCD’s Distressed Debt Weekly – Free!

LCD’s Distressed Weekly offers comprehensive news, analysis, data, and market calendars covering the distressed leveraged loan and high yield bond segments. This encompasses debt that’s trading at steep discounts or issuers which have recently underwent credit defaults or downgrades into junk territory.

Here’s some of what’s you’ll see in each Distressed Weekly.

  • Full distressed market news stories from LCD News
  • Weekly Market Wrap-up
  • Recent debtor-in possession loans
  • Recent loan covenant amendments
  • Bankruptcy hearing deadlines
  • Loan, high yield bond returns
  • YTD leveraged loan defaults
  • Chapter 11 Exit Pipeline
  • LCD’s Restructuring Watchlist
  • Upcoming loan maturities

Download your complimentary copy here! (We’ll send you a link.)


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