News

content

With Big Deals to Finance, Cross-Border Loan Issuance Booms

x-border loan issuance

The global volume of cross-border leveraged loan transactions has topped $100 billion in the year to date, with some $102 billion of this activity seen so far in 2018, according to LCD.

Should the pace of this issuance continue, the market is set to top the $110 billion cross-border volume notched in 2017, which is the highest figure recorded in more than a decade. By this point in 2017, the market had hosted $90.3 billion of cross-border issuance — though it has to be said the launch pipeline for the remainder of this year is not looking overly full.

These figures highlight the fact that the global leveraged loan market has become increasingly interconnected over the last few years, as borrowers look to raise ever-larger sums, and generate global cash flows.

Much of this year’s cross-border activity has hit the market since the summer break, with 14 global transactions launched since the beginning of September — offering a balanced blend of both new-money buyout and M&A-related deals, as well as opportunistic repricings and amendments.

That said, cross-border deals are particularly well suited to large new-money acquisition situations and the structure has been used on most of the year’s banner syndications, such as debt backing the buyouts of Refinitiv and Akzo Nobel Specialty Chemicals. In such cases, the structure not only allows borrowers to better-match their liabilities with revenue, but it can also bring competitive tension to syndications, and therefore provide an overall more attractive funding package. – Nina Flitman/David Cox

Try LCD for Free! News, analysis, data

Follow LCD on Twitter.

LCD comps is 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.

content

Risk off (Finally): Investors Withdraw $1.5B from US Leveraged Loan Funds

loan fund flows
U.S. loan funds reported an outflow of $1.5 billion for the week ended Oct. 31, according to Lipper weekly reporters only. This marks the largest weekly outflow from loan funds since the week ended Dec. 16, 2015, which posted an outflow of about $2 billion.

This follows last week’s slight outflow of $7 million, and narrows the year-to-date total inflow to roughly $10.2 billion.

Mutual funds drove the bulk of the outflow this week, with an exit of $956 million, marking the largest exit from mutual funds since the week ended Dec. 23, 2015, which posted a mutual-fund exit of $1.2 billion (and barring a nominal $1.3 billion mutual-fund outflow for the week ended Nov. 11, 2017, which came as the result of a reclassification at a single institutional investor).

Meanwhile, ETFs reported an outflow of $551.5 million this week, indicating the largest weekly ETF exit on record.

The four-week trailing average snapped a 40-week streak in the black, slipping to negative $247 million, from positive $207 million last week.

The change due to market conditions this past week was a decrease of $10 million, following last week’s decline of $186 million.

Total assets were roughly $106.8 billion at the end of the observation period. ETFs represent about 11.7% of total assets, at roughly $12.5 billion. — James Passeri

Try LCD for Free! News, analysis, data

Follow LCD on Twitter.

LCD comps is 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.

content

As Brexit Dealings Drag On, Sterling High Yield Issuance Dwindles

As the Brexit negotiation debacle drags on, with no clarity on the final deal yet emerging, the leveraged finance markets have spent the year plagued by uncertainty.

Any ambiguity is typically a headwind for markets, but the consequences in this case have tended to differ between leveraged loans — which have seen robust volumes from U.K. borrowers and no discernible spike in pricing — and the bond market, where volumes have fallen and new-issue yields have shot up.

“It is very hard to price risk with no clarity,” comments a head of EMEA leveraged finance. “Sterling volumes in high-yield are down 40–50% this year. The marginal investor sets the price, so it has gotten more expensive. And while there has been some success on individual deals, volumes are down in the main.”

Indeed, high-yield issuance from U.K.-domiciled companies is at its lowest level since the Brexit referendum took place in 2016, currently running at $15.5 billion-equivalent in the year to date, versus $15.15 billion in all of 2016. Last year, this volume was up at $27.4 billion as companies looked to get deals done before the Brexit noise grew louder this year.

Sterling-denominated high-yield supply has also collapsed, falling to €4.5 billion-equivalent so far this year, versus €12.6 billion in all of last year. The total is only a touch lower than the €4.7 billion seen in FY16 however, which itself was the lowest full-year tally on this measure since €4.2 billion was recorded in 2010. Note, last year’s volume is a record-high since LCD began tracking the market in 2005. – Luke Millar

Try LCD for Free! News, analysis, data

Follow LCD on Twitter.

LCD comps is 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.

content

Free LCD/S&P Global Market Intelligence Webinars

Free Event: Downstream Impact of Current Leveraged Loan Market Dynamics 11/1/18

A new, on-demand Webinar from LCD and S&P Global Market Intelligence is now available, examining the downstream impact of current U.S. leveraged loan market dynamics.

The free Webinar can be viewed here. All the slides used in the presentation are available for download.

This in-person event, conducted on Oct. 29, features a panel discussion moderated by LCD Sr. Editor Shivan Bhavnani, with

  • Andrew Bellis, Managing Director, Head of Liquid Loans at Partners Group
  • Pat Daugherty, President & Chief Investment Officer, Glacier Lake Capital
  • Mitchell Drucker, Managing Director at Garrison Investment Group
  • Randy Schwimmer, Senior Managing Director, Head of Origination & Capital Markets at Churchill Asset Management

Panel topics:

– Covenant erosion
– Unrestricted versus restricted subsidiaries
– Portability: What is it, and why are people talking about it?
– What will recovery rates look like after the next downturn?
– How does the current market (peak?) stack up vs 2007/08?
– What will the market see in 2019?

subordinated debt cushion

Also in this Webinar:

  • LCD Managing Director Ruth Yang provides a detailed look at credit risk, loan market recoveries, and the (considerable) value of a debt cushion.
  • Andrew Watt, Managing Director, S&P Global Ratings, focuses on that state of today’s credit market, and whether there are warning signals that the cycle is ending.
  • LCD Managing Editor Tim Cross presents an overview of today’s U.S. leveraged loan market, focusing on recent big-ticket LBOs, leverage, and issuance.

3Q18 Global High Yield Outlook (with Marty Fridson) 10.19.18

LCD/S&P Global Market Intelligence’s webinar detailing the third-quarter 2018 high-yield markets, and a look ahead to the fourth quarter, is now available to view free, on-demand.

This presentation features analysis from Marty Fridson of LCD and Lehmann Livian Fridson Advisors, along with John Atkins, Luke Millar, and Ruth Yang of LCD.

You can view the webinar here.

In this quarter’s presentation:

  • HY returns, vs Treasuries, equities
  • Total HY return, by region
  • Total return, by ratings
  • Total return, by maturity
  • Total return, by industry
  • Credit spread curve
  • HY bond prices
  • Europe leveraged finance volume: M&A
  • Cross-border activity
  • New-issue yield vs guidance

LCD presents these high-yield market updates each quarter.


M&A Outlook, with Focus on Debt, Private Equity

S&P Global Market Intelligence is pleased to present a free webinar detailing today’s M&A market, including how current and potential obstacles might affect the leveraged finance world:

M&A Overview, with Focused Insight on the Debt and Private Equity Markets 

  • Date: Thursday, October 11, 2018
  • Time: 11:00 am – 12:00 pm Eastern time
  • Duration: 1 hour

You can register for the webinar here (link).

Included in the webinar: Transaction activity has always been impacted by numerous outside factors. Recent complications include Brexit, trade wars, and tariffs. With numerous potential influences, what is the current state of the market, based on these latest trends?

Join S&P Global Market Intelligence for a complimentary webinar, where industry experts share their insights while focusing on the M&A, Debt, and Private Equity transactional markets.

  • Analyzing recent global M&A volumes and factors driving activity. What is the outlook of M&A deals for the US?
  • Debt markets and LBO activity: What is the current state of the market?
  • Deep dive into private equity including buy and sell-side conditions and strategies

Moderator
Lawrence Choy
Associate Director – Corporates Segment
S&P Global Market Intelligence

 

Panelists
Nathan Stovall
Senior Research Analyst – FIG Research
S&P Global Market Intelligence

 

Ruth Yang
Managing Director – Leveraged Commentary & Data
S&P Global Market Intelligence

 

Justin Abelow
Managing Director – Houlihan Lokey
Financial Sponsors Group

Webinar viewers can, while registering, submit questions to be answered by the panelists.


2Q18 Global High Yield Outlook (with Marty Fridson)

LCD/S&P Global Market Intelligence’s webinar detailing the second-quarter 2018 high yield markets, and a look ahead to the second half of the year, is now available to view free, on-demand.

This presentation features analysis from Marty Fridson of LCD and Lehmann Livian Fridson Advisors, along with John Atkins, Luke Millar, and Ruth Yang of LCD.

You can view the webinar here.

hy default recessions

In this quarter’s presentation:

  • Today’s dire high-yield headlines, vs. market realities
  • U.S. high-yield issuance sinks …
  • … though M&A/LBO share of market rises
  • HY prices in the secondary soften noticeably
  • European high-yield issuance sinks, as well …
  • … with a host of offerings pulled from market
  • High-yield spreads rise in the U.S. and Europe

hy prices

LCD presents these high-yield market updates each quarter.

The charts used in the presentation are available for download.


Free Webinar: 1Q 2018 US/Europe High Yield Analysis (Fridson)

LCD/S&P Global Market Intelligence’s webinar detailing the First-Quarter 2018 High Yield Markets is now available to view, on-demand.

This complimentary presentation features analysis from Marty Fridson of LCD and Lehmann, Livian, Fridson Advisors, along with John Atkins, Luke Millar, and Ruth Yang of LCD.

You can view the webinar here.

In this quarter’s presentation:

  • Treasury yields rise while high yield sinks
  • High yield upholds hybrid reputation
  • High yield returns favor shorter maturities
  • Better-rated credits underperform
  • High yield outperforms vs better-quality comps
  • In the red: a look at industry returns
  • US high yield volume, pricing
  • Europe high yield volume, LBO activity
  • Spreads, Europe vs US

LCD presents these high yield market updates each quarter.

The charts used in the presentation are available for download.


The Global Credit Markets – 10 Years After the Credit Crunch

LCD and SP Global Market Intelligence are pleased to present a free replay of our in-depth analytical look at how today’s leveraged finance market compares to that of 2007–08, before the onset of the credit crisis: 10 Years Down the Road: The U.S. Leveraged Finance Markets, Then vs Now

This in-person complimentary event features analysis from high-yield bond market expert Martin Fridson and LCD’s Marina Lukatsky, as well as a discussion on the state of today’s market, featuring Crescent Capital Managing Director Jonathan Insull, LSTA Executive Director Lee Shaiman, Progow Executive Chairman Peter Gleysteen, and LCD Senior Editor/CLO market reporter Andrew Park. The panel is moderated by LCD Managing Director Ruth Yang.

A link for the replay is here.
The replay is free, and after registering for the presentation users can download the slides used for the analysis. These include:

  • A brief history of the leveraged finance market, over the past 10 years (Yang)
  • A look at credit quality progression in the high yield bond market (Fridson)
  • The effect of record-low volatility (?) and reduced liquidity in the high yield market (Fridson)
  • Evolution of the US leveraged loan mart: size, issuer quality, covenant-lite (Lukatksy)
  • Risk vs Reward: Now, compared to pre-Lehman (Lukatsky)
  • That state of the CLO market (Shaiman, Gleysteen, Park)

Global High Yield Markets: 2017 Review/2018 Outlook

January 23, 2018

Featuring LCD’s high yield expert Martin Fridson. Some of the topics covered:

  • Yields
  • Return vs risk, by asset category (with surprising results re distressed debt)
  • Total return, by industry
  • Default rate forecast
  • Poll: Will US HY spreads go up/down/unchanged in 2018?

webinar chart 1

As well, the webinar features reviews/outlooks of the U.S. leveraged loan market, along with the European high yield and leveraged loan markets.


Leveraged Finance Yields (and CLOs): How Low Can They Go?

July 12, 2017

Featuring LCD CLO reporter Andrew Park. Some of the topics:

  • A look at record-low yields in the leveraged loan market
  • Analysis of loan market supply (new loan issuance) vs Demand (retail investment + CLO issuance)
  • Specifics on CLO formation
  • Cost of borrowing: US (cheap) vs Europe (not cheap)
  • Why CLOs are attractive investments

content

Free Event: Downstream Impact of Current Leveraged Loan Market Dynamics

A new, on-demand Webinar from LCD and S&P Global Market Intelligence is now available, examining the downstream impact of current U.S. leveraged loan market dynamics.

The free Webinar can be viewed here. All the slides used in the presentation are available for download.

This in-person event, conducted on Oct. 29, features a panel discussion moderated by LCD Sr. Editor Shivan Bhavnani, with

  • Andrew Bellis, Managing Director, Head of Liquid Loans at Partners Group
  • Pat Daugherty, President & Chief Investment Officer, Glacier Lake Capital
  • Mitchell Drucker, Managing Director at Garrison Investment Group
  • Randy Schwimmer, Senior Managing Director, Head of Origination & Capital Markets at Churchill Asset Management

Panel topics:

– Covenant erosion
– Unrestricted versus restricted subsidiaries
– Portability: What is it, and why are people talking about it?
– What will recovery rates look like after the next downturn?
– How does the current market (peak?) stack up vs 2007/08?
– What will the market see in 2019?

subordinated debt cushion

Also in this Webinar:

  • LCD Managing Director Ruth Yang provides a detailed look at credit risk, loan market recoveries, and the (considerable) value of a debt cushion.
  • Andrew Watt, Managing Director, S&P Global Ratings, focuses on that state of today’s credit market, and whether there are warning signals that the cycle is ending.
  • LCD Managing Editor Tim Cross presents an overview of today’s U.S. leveraged loan market, focusing on recent big-ticket LBOs, leverage, and issuance.

Try LCD for Free! News, analysis, data

Follow LCD on Twitter.

LCD comps is 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.

content

Leveraged Loan ‘Weakest Links” Ranks Grow as Credit Quality Remains in Spotlight

LCD’s Weakest Links analysis for the U.S. leveraged loan market continues to highlight a strong undercurrent of risk.

During the third quarter of 2018, the share of loan Weakest Links was unchanged from the second quarter, at 7.2%. But the absolute number of issuers making up the Weakest Links rose from 87 to 93 during the third quarter. LCD’s loan Weakest Links are issuers in the institutional loan market with a corporate credit rating of B– or lower and a negative outlook.

The third-quarter count is the highest since LCD began tracking the number in 2013. Since that time the count has more than tripled, from 28 to the current 93.

An increase in Weakest Links can be an indicator of financial distress down the road, as the default rate on these issues remains sharply higher than credits not in the Weakest Links grouping. In the first three quarters of 2018, 11% of the credits from the 2017 year-end loan Weakest Links cohort have restructured, including the defaults of retailers Nine West and Sears, as well as Oil & Gas issuers Fieldwood EnergyPhiladelphia Energy, and Harvey Gulf. Looking back further to the Weakest Links from 2013, 32% have defaulted or restructured through the third quarter of 2018.

In contrast, 0% of the credits rated B or higher at the end of 2017 have defaulted or restructured, and just 6% in total of that pool at year end 2013 had done so in through today. – Ruth Yang

Try LCD for Free! News, analysis, data

Follow LCD on Twitter.

LCD comps is 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.