European Leveraged Loan Issuance Hits Post-Crisis High

European leveraged loan issuance

Total leveraged loan volume in the European syndications market finished the year at €120.4 billion — its highest level since 2007, when the full-year supply hit €165.5 billion, according to LCD.

This marks a whopping 73% increase over 2016, illustrating just how busy the market was all year (apart from a typical few weeks’ lull in August). In fact, bankers and investors say they can’t recall a time when they were so busy in December.

With investor appetite for loan paper strong throughout 2017, opportunistic transactions – refinancings of existing debt and credits backing dividends to private equity shops –  comprised the bulk of activity for the year, at 59% of overall volume, split 15% for recaps and 44% for refinancings.

This compares with a 45% share of the overall volume for opportunistic transactions in 2016, and a 37% slice in 2015.

Leveraged loans are undertaken by riskier borrowers – those rated BB+ or lower – and typically have higher yields than investment grade debt, making them attractive to a certain class of institutional investor. – Taron Wade

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