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US Leveraged Loan Funds Extend Inflow Streak With $318M Gain

us loan flows

U.S. leveraged loan funds recorded an inflow of $318.4 million in the week ended Sept. 21, according to the Lipper weekly reporters only. That’s up slightly from $306.2 million last week and just shy of the $318.2 million infusion in the week prior, which is the 2016 high.

With this latest reading, the inflow streak for loan funds hits eight weeks for a total of $1.585 billion over that span.

This week’s result raises the four-week trailing average to an inflow of $251 million, from $246 million.

ETFs accounted for 40%, or $127 million, of the total inflow this week.

Year-to-date outflows from leveraged loan funds now total $3.8 billion, based on outflows of $5.33 billion from mutual funds against inflows of $1.53 billion to ETFs, according to Lipper.

The change due to market conditions this past week was positive $83.7 million. Total assets were $64.6 billion at the end of the observation period. ETFs represent about 11% of the total, at $7.4 billion. — Jon Hemingway

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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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Brexit Worries? 3Q European Loan Issuance Matches 2Q Output

european leveraged loan issuance

As the third quarter got underway the U.K.’s shock decision to leave the E.U. was widely expected to plunge markets into volatility, and the leveraged loan primary into an extended period of inertia that would be compounded by the summer break. However, such fears all proved unfounded.

Total loan volume of €14.6 billion has been raised in the third quarter (through Sept. 16), which is only slightly down on 2Q’s tally of €16.7 billion, and higher than every quarter preceding that back to 2Q15.

Even more encouragingly, the €12.5 billion of institutional loan supply in the third quarter is the largest such reading since the third quarter of 2014, and is up 7% on 2Q. – Luke Millar

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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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Europe: As Issuers’ Market Heats Up, Leveraged Loan Repricings Surge

european leveraged loan repricings

A wave of repricings has hit the European leveraged loan market, with participants noting that more issuers will look to take advantage of strong demand and insufficient supply to cut their cost of capital.

Already this month SIG Combibloc, Orion Engineered Carbons, and Constantia Flexibles have launched amendments to reprice their existing facilities, while Western Digital and Styrolution have launched deals to refinance debt at lower margins.

Last week, Armacell repriced its existing TLB, not only upsizing the facility by €45 million on the back of strong investor demand, but also reverse-flexing the amendment to push pricing even tighter. – 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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Rocket Software Readies $880M Leveraged Loan Backing Dividend/Recap

Credit Suisse has scheduled a lender meeting for 9 a.m. EDT on Thursday to launch an $880 million loan package for Rocket Software that will finance a dividend recapitalization and an acquisition, according to sources. Commitments will be due by Thursday, Oct. 6.

The financing includes a $630 million, seven-year first-lien term loan and a $215 million, eight-year second-lien term loan, both covenant-lite. A $35 million revolver rounds out the loan package.

Price talk on the first-lien term loan is outlined at L+450–475, with a 1% LIBOR floor, offered at 99. That would indicate a yield to maturity of 5.80–6.07%. Lenders are offered six months of 101 soft call protection.

The second-lien is guided at L+925–950, with a 1% floor and an OID of 98. At that talk, the loan will yield roughly 11.06–11.33% to maturity. The call schedule on the second-lien is 102, 101, and par.

Proceeds will be used to refinance existing debt, fund a distribution, and finance an acquisition, sources said.

Rocket Software, a longtime portfolio company of Court Square Capital Partners, is a software development firm that builds and services enterprise infrastructure products for OEMs, networks and software companies and enterprises. Current corporate ratings are B/B2.  — Jon Hemingway

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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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Leveraged Loan Issuance Keeps On as Investor Demand for Paper Grows

US leveraged finance issuance

Leveraged finance issuance in the U.S. is continuing its post-Labor Day surge with a substantial $28.4 billion in combined loan and high yield bond issuance last week, up from the already healthy $25.6 billion the previous week, according to LCD, an offering of S&P Global Market Intelligence.

Loans once again led the way, with $19.5 billion of new issuance via a whopping 38 deals, as investors remain hungry for paper.

“Arrangers continued to roll out new transactions into a market brimming with a mix of M&A, refinancing, and recap deals,” writes LCD’s Jon Hemingway, who covers the leveraged loan segment. “And the next two weeks should be busy as investors sort through this new business.”

Those M&A deals made some of the biggest splashes in market. Nexstar Broadcasting last week unveiled a $2.85 billion term loan to help finance the company’s $4.6 billion acquisition of Media General. Also, Inventive Health launched to syndication a $1.68 billion institutional loan backing the purchase of an equity stake in the company by PE concern Advent International.

 The sustained investor appetite is clear. U.S. loan funds last week saw another sizable cash inflow, of $306 million. That’s seven straight weeks investors have put money into the asset class, totaling $1.27 billion, according to Lipper.

Issuance in the high yield bond segment of the leveraged finance space totaled $8.9 billion last week, up slightly from the previous week. Many of those deals refinanced debt, though there was M&A as well, including a $500 million issue backing Onex Corp.’s LBO of Thomson Reuters IP&S (Camelot) and a $400 million deal backing PDC Energy’s acquisition of Kimmeridge Energy assets.  As well, Dutch internet concern Ziggo priced $2.65 billion of notes as part of a cross-border offering backing a recapitalization and dividend.

While issuance continued, high yield investors appeared to take a broader step backward last week, withdrawing a hefty $2.45 billion from the asset class, according to Lipper.

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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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Another (Big) Inflow for US Leveraged Loan Funds; That’s 7 Straight Weeks

us loan funds

U.S. leveraged loan funds recorded an inflow of $306.2 million in the week ended Sept. 14, according to the Lipper weekly reporters only. This is the second largest inflow of the year and coupled with last week’s $318.4 million infusion, it’s the strongest two-week run since March 2014.

Moreover, it extends the current inflow streak to seven weeks, the longest consecutive run since that same period in 2014. The total inflow over that stretch is $1.27 billion.

This week’s result raises the four-week trailing average to $246 million, from $201 million.

ETFs accounted for 58%, or $177.5 million, of the total inflow this week.

Year-to-date outflows from leveraged loan funds now total $4.13 billion, based on outflows of $5.52 billion from mutual funds against inflows of $1.41 billion to ETFs, according to Lipper.

The change due to market conditions this past week was negative for the first time in 11 weeks, at $24.8 million. Total assets were $64.2 billion at the end of the observation period. ETFs represent about 11% of the total, at $7.26 billion. — Jon Hemingway

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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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Demand for Higher-Yielding Leveraged Loans Surges as Supply Slips

supply v demand - leveraged loans

The already issuer-friendly U.S. leveraged loan market kicked into a higher gear in August as institutional investor demand for paper topped available supply – that would be new-issuance – by a whopping $12.1 billion, according to LCD, an offering of S&P Global Market Intelligence.

What does that mean for the market? Thinner pricing (and returns) for investors, for starters.

Indeed, the average yield to maturity dipped to 5.09% in August from 5.28% in July, as U.S. loan investors scrambled for a piece of pretty much any leveraged credit that came to market last month.

To that point, price-flexes, a reliable gauge of  which way the leveraged loan market is tilting, dramatically favored issuers in August. There were 23 deals on which pricing or fees were flexed downward during syndication – benefiting issuers – while only four were flexed higher (benefiting investors).

For this analysis, loan demand includes CLO issuance and inflows to loan funds and ETFs. Supply entails the amount of outstanding loans, per the S&P/LSTA Index.

You can read more about how price-flex works in LCD’s Loan Market Primer (it’s free).

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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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Leveraged Loan Market Off to Shotgun Start after Labor Day Hiatus

US leveraged finance issuance

The U.S. leveraged finance market returned from the Labor Day break ready to do business, with some $25.6 billion in new deals last week, the most since the middle of June, according to LCD, an offering of S&P Global Market Intelligence.

Leading the charge was the leveraged loan segment, which saw a healthy $17.4 billion in issuance via 23 credits. Of note, it’s not just issuers looking to take advantage of the increasingly low rates on offer to opportunistically refinance existing debt.

“Roughly half the deals last week backed LBOs and other M&A transactions,” according to LCD’s Jon Hemingway, in his weekly market analysis.

This will be a welcome development to institutional loan investors, of course, as the riskier M&A/LBO transactions offer higher spreads and fees than do plain-vanilla deals (such as refinancings). As well, they add new money to an asset class that is increasingly hungry for paper.

Indeed, investors last week poured a net $318 million into U.S. loan funds.That’s the largest cash inflow in 17 months.

With the recent activity, 2016 U.S. leveraged loan volume totaled $299 billion as of Sept. 9, down only 4.2% from the same period last year.

The high yield bond segment also returned from a two-week hiatus, pricing $8.2 billion in deals, the most since the week of June 10. Unlike the loan market, high yield issuers seemed focused on lowering borrowing costs.

“Opportunistic refinancing was the major theme this week as the market returned to life following the Labor Day break,” said LCD’s Jakema Lewis, in her weekly market wrap, published Sept. 8. “A significant portion of [offerings] this week has come from issuers looking to take out or repay existing debt.”

As with the loan market, investors returned to high yield funds last week,pumping a net $610 million into the asset class. That’s the fifth week out of the last six that the asset class has seen an inflow.

U.S. high yield issuance through Sept. 9 totaled $158.6 billion, down 26% from the same period a year ago, according to LCD.

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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 Loan Funds See Largest Cash Inflow – $318M – in 17 Months

US loan funds

U.S. leveraged loan funds recorded an inflow of $318.4 million in the week ended Sept. 7, according to the Lipper weekly reporters only. This is the strongest inflow since April 15, 2015 and it extends the positive streak to six weeks, for a total inflow of $960.9 million over that span.

With this week’s figure, the four-week trailing average moves up to $201 million, from $145.5 million. This is the highest level since April 2014.
ETFs accounted for 36% of the total inflow this week and have now strung together seven straight weeks of inflows.

Year-to-date outflows from leveraged loan funds now total $4.43 billion, based on outflows of $5.65 billion from mutual funds against inflows of $1.22 billion to ETFs, according to Lipper.

The change due to market conditions this past week was positive $111.2 million. Total assets were $60.3 billion at the end of the observation period. ETFs represent about 12% of the total, at $7.09 billion. — Jon Hemingway

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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 Impressive July, European Leveraged Loans Return 0.66% in August

european leveraged loan returns

European leveraged loans returned 0.66% in July. That’s down significantly from the impressive 1.41% in July – when the market rebounded from the Brexit-vote drubbing it took in June – and is in line with the May numbers (these exclude gains/losses re currency).

Through August, leveraged loans in Europe have returned 4.01% in 2016, slightly ahead of the asset class’ performance last year. – 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.