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European leveraged loans gain 0.17% on Friday; YTD return: 0.18%

ELLI Daily 2016-02-08

The European Leveraged Loan Index (ELLI) gained 0.17% on Friday (excluding currency). The ELLI has returned 0.06% thus far in February. The total return for the ELLI in the year to date is 0.18%.

In contrast, the U.S. leveraged loan market has returned -0.72% so far in 2016. — Staff reports

This story first appeared on www.lcdcomps.com, LCD’s subscription site offering 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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Investors Again Withdraw Cash From US Leveraged Loan Funds; Streak at 14 Weeks

Loan funds reported a $164 million retail-cash outflow for the week ended Oct. 28, building upon last week’s outflow of $169 million, according to Lipper. This is the 14th consecutive withdrawal, for a total redemption of $5.8 billion over that span.

leveraged loan fund flows

The outflow was all from mutual funds, at $212 million, while ETFs countered with an inflow of $48 million, for an inverse 29% of the total. Last week’s outflow was 98% mutual funds, and the two weeks prior were also inverse, with ETF inflows filling in mutual fund outflows, suggesting the potential for fast money hedging strategies and market timing.

Despite another a solid outflow, the trailing four-week average moderates to negative $187 million per week, from negative $343 million last week and negative $365 million two weeks ago.

The year-to-date outflow deepens to $9.6 billion, with just 4% tied to ETFs, versus an outflow of $10.1 billion at this point last year, with no measurable ETF influence.

In this past week’s report, the change due to market conditions was negative $29 million, which is essentially nil against total assets, which were $85.8 billion at the end of the observation period. The ETF segment accounts for $6.3 billion of the total, or approximately 7% of the sum. — Matt Fuller

Follow Matthew on Twitter @mfuller2009 for leveraged debt deal-flow, fund-flow, trading news, and more.

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Volume of new middle market deals in Oct looks set to extend decline

Two new deal launches this week have kept the middle market primary alive, but just barely. It remains quiet on the supply front, and October volume currently projects to fall short of September’s $1.4 billion, which is the low point for 2015. Middle market loan volume has declined in each month since May.

The new deal launches were loans for Primeline Utility Services and Alpha Media. – Jon Hemingway

Chart shows new-issue middle-market loan volume (loans of up to $350 million).

Middle Market loan vol Oct 22 2015

 

 

 

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Loan-fund AUM edges up in July, but outflows heavy so far in August

After declining by $2.8 billion in June, loan mutual funds’ asset under management edged up $343 million in July, to $136 billion, according to Lipper FMI and fund filings, as concerns over the potential Grexit faded after Greece agreed to a bailout package from the European Union. July’s small increase left loan fund AUM down $5.3 billion over the first seven months of 2015, from 2014’s final reading of $141.3 billion (though outflows resumed and intensified in early August amid choppy conditions across the capital markets, as we discuss below).

Loan fund AUG in July

 

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May returns: Equities outrun field; high yield bests leveraged loans

loan returns v high yield

Leveraged loan returns were in the middle of the pack among the five asset classes LCD tracks monthly, behind equities and high yield bonds, while outperforming investment-grade corporate bonds and 10-year Treasuries. The 10-year Treasury yield climbed to 2.12% on May 29 from 2.05% at the end of April.

For the first five months of 2015 the story is similar. The 10-year yield is down slightly from the year-end mark of 2.17%. As a result, 10-year Treasuries and investment-grade corporates are lagging loans on the year-to-date leaderboard. High-yield bonds, meanwhile, are ahead, and equities slightly behind. – Steve Miller

Follow Steve on Twitter for leveraged loan news and insight.

This story is taken from LCD’s monthly wrap-up of the leveraged loan asset class. That info is available to LCD News subscribers here.

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American Tire Distributors outlines price talk on $720M leveraged loan

An arranger group led by Bank of America Merrill Lynch today launched the loan refinancing for American Tire Distributors, setting price talk of L+450-475, with a 1% LIBOR floor, and a 99.5 offer price. The loan includes 101 hard call protection for one year, sources said.

The new $720 million, 6.5-year term loan will refinance the issuer’s existing term debt, sources said. The loan will be covenant-lite. The transaction has seen some early momentum, sources said. Commitments are due by noon EDT on Thursday, March 26.

At current talk, the loan would yield 5.72-5.98% to maturity.

Recall that the issuer in January tapped the loan market for a $140 million add-on term loan due 2018 (L+475, 1% LIBOR floor), but that loan was unwound when American Tire didn’t proceed with its planned IPO.

B/B2 American Tire then followed up in February with $855 million of 10.25% subordinated notes due 2022 to refinance its 11.5% subordinated notes due 2018 and fund a dividend to owner TPG.

Huntersville, N.C.-based American Tire Distributors distributes tires, wheels, service equipment, and shop supplies to the replacement-tire market. – Chris Donnelly

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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

 

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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.

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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.