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European Leveraged Loan Investors See Outsized Surplus of Paper

european loan supply demand

European institutional investors struggling for yield in the still-hot credit markets might be in for a bit of relief.

For the first time since April, the supply of leveraged loan paper available to investors exceeded market demand in August, by a hefty €4.9 billion, according to LCD.

The supply surplus was partly brought about by a spate of new issuance during the summer, which pushed the total amount of outstanding leveraged loans in Europe to €124.7 billion by the end of August, the most since 2011, according to the LCD European Leveraged Loan Index.

The supply/demand equation is calculated using the amount of new loan issuance, less repayments of existing loans (supply) vs. CLO issuance (demand). Throughout much of this year and last investor demand for paper has dwarfed supply, bringing yields to or near record lows and prompting concern in some corners regarding weakening deal structure. – 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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