For the first time in 16 months, the supply of U.S. leveraged loans will outpace investor demand, and in a big way.
Subtracting loan fund flows and CLO issuance (LCD’s proxy for demand) from the net change in loan outstandings per the S&P/LSTA Index (our proxy for supply), the market saw a whopping $22 billion supply surplus in June.
This is, of course, a dramatic turnaround from the shortage of paper that has characterized the loan market since 2Q16. That shortage was as deep as $14 billion in January of this year and has averaged a withering $6.3 billion over the prior 15 months. – Marina Lukatsky
This story is taken from analysis which 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.