LCD’s Daily Leveraged Loan Playbook: Your Guide to today’s market

LCD each days gives leveraged loan market players a quick, simple way to catch up on the market and prepare for the day’s activity: The Daily Leveraged Loan Playbook.

leveraged loan daily playbook

The Daily includes a look at what’s upcoming in the current day’s new-issue and secondary markets, as well as expected developments regarding defaults, amendments and loan prices in the secondary.

It also offers snapshot statistical analysis of the day’s markets, including loan returns, recent issues, gainers/losers in the previous day’s trading market, and updated new-issue stats.

If you haven’t seen The Playbook, check it out: LCD Daily Playbook.

For more info on The Playbook or other LCD products contact Marc Auerbach



Fifth Street BDC appoints Owens as CEO, replacing Tannenbaum

Fifth Street Finance Corp. has named Todd Owens as CEO, replacing Leonard Tannenbaum.

Owens most recently was president of Fifth Street Finance Corp., a role he held since September 2014.

Prior to Fifth Street, Owens spent 24 years at Goldman Sachs, where he was head of U.S. West Coast Financial Institutions Group, head of specialty finance, and a senior member of the bank group. He was also lead banker on FSC’s IPO.

Tannenbaum remains chairman and CEO of Fifth Street Asset Management, manager of two publicly traded BDCs, Fifth Street Finance Corp. (FSC) and Fifth Street Senior Floating Rate Corp. (FSFR).

Fifth Street Asset Management joined fellow BDC managers Medley and Ares, which all listed shares in IPOs last year.  - Abby Latour

Follow Abby on Twitter for news and insights on the middle market and BDCs segments.


US Leveraged Loans Return Slim 1.60% in 2014; Lose 1.25% in Dec.

leveraged loan returns-annual

The S&P/LSTA Leveraged Loan Index return fell to a three-year low of 1.60% in 2014, from 5.29% in 2013. The Loan 100 lagged the broader Index in 2014 with a 0.99% return, after advancing 5.02% in 2013.

leveraged loan returns-monthly

For December, the S&P/LSTA Index returned negative 1.25%, as loans traded lower in the face of record retail outflows and crumbling investor sentiment early in the month.

It was the biggest monthly setback for the Index since August 2011, when returns plunged to a post-credit-crisis low of negative 4.40% amid a cocktail of exogenous events that was capped by S&P’s downgrade of the U.S.’s credit rating. – Steve Miller

Follow Steve on Twitter for leveraged loan news and market insight.


Market Reset: Is this the new normal for leveraged loans?

Amid softening technical conditions and the risk-off theme that has dominated capital markets lately, loan yields have climbed 50-75 bps over the past month, with prices on loans falling markedly, as evidenced by the secondary bid distribution chart.

loan bids by range

Does the softer market represent a new normal for leveraged loans?

The outlook, as always, is in the eye of the beholder. In recent days, stability in the equity markets has allowed loan prices to find a bottom. That said, participants suggest the bias for the time being may be negative. Here’s why:

  • Loan fund flows: managers expect outflows to persist, what with rates falling in recent weeks. That will put more supply in the system as managers sell loans to meet redemptions.
  • Relative-value players: HY funds also remain net sellers of loans, participants say, further pressuring prices.
  • CLOs: The pace of prints remained robust in early October with managers inking $6.5 billion through the 16th, pushing year-to-date issuance to a record $99.9 billion. Still, players expect the number of new deals to fall significantly until conditions improve. That may drain liquidity from the system in the months ahead.
  • Supply: while off the post-credit-crunch highs of August, there remains $33.7 billion on the M&A forward calendar, much of which will hit the market over the final months of 2014. Given today’s flagging loan demand, placing this paper may be challenging.


This analysis is part of a more detailed LCD News story, available to subscribers here. – Steve Miller

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


WR Grace launches bankruptcy exit loan as BBB-/Ba2 ratings emerge

wr grace logoBookrunners Goldman Sachs, Deutsche Bank, Bank of America, and HSBC launched their $1.15 billion, cross-border term debt package backing W.R. Grace & Co.’s exit from Chapter 11.

With loan and issuer ratings emerging at BBB-/Ba2, arrangers are talking the debt package at L+250, with a 0.75% LIBOR floor, at 99.5, with the euros 25 bps wider on the spread. The seven-year loans would include six months of 101 soft call protection.

The financing will include a $400 million, five-year revolving credit, and a $900 million funded term loan and a $250 million delayed-draw term loan, both with seven-year durations. Roughly $200 million of the funded term loan will be carved out in euros and distributed separately, while U.S. investors are asked to commit to a strip of the funded dollar and delayed-draw term loans, sources said. The delayed draw loan would be available for one year.

Citi, Commerzbank, Key Bank, PNC, and SMBC are senior managing agents for the exit financing.

The exit deal comes to market 12 years after Grace filed for bankruptcy and nearly five years after the company awarded the financing mandate.

The long-running bankruptcy case was precipitated by a nearly doubling of asbestos injury claims in 2000. The chemical company last month cleared the remaining hurdle to its exit plan, settling on a $1.1 billion payout for principal and accrued interest on its $500 million of pre-petition loans, rather than the higher sum that was sought by some investors. – Chris Donnelly


Leveraged loan returns lag high yield and equities (of course) in 4Q, 2013

loan returns vs other asset classes

Leveraged loan returns were in the middle of the pack, compared to other major asset classes LCD tracks, both during the fourth quarter and for all of 2013. During the last three months of the year U.S. leveraged loans returned 0.47%, with a full-year return of 5.29%. That’s down from the 9.38% recorded in 2012.

High yield bonds returned 0.55% in the fourth quarter and 7.42% in 2013, making it the second-strongest asset class, per returns, tracked by LCD. Equities were in an entirely different orbit, of course, returning a relatively modest 2.53% in the fourth quarter and a whopping 32.41% during the year.

Treasuries and investment grade corporate bonds continued to fund tough markets, returning negative 2.01% and negative 0.18%, respectively, in the fourth quarter and negative 7.83%/negative 1.46% in 2013.


Leveraged loans return 0.03% today; YTD return is 3.23%

Loans gained 0.03% 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 3.23%.

LCD Daily Loan Index – May 22, 2013



Perf. Loans





For 5/22/13







For 5/21/13















Month-To-Date 5/22/13







12/31/12 – 5/22/13







12/31/11 – 5/22/12







Source: S&P/LSTA Leveraged Loan Index.