The “January effect” was in overdrive last month, with bids in the U.S. leveraged loan secondary surging broadly and freshly inked deals advancing after entering the market, as investors proved eager to put cash to work.
It was a standout month, with the average break price soaring to 100.61% of par, the highest since January 2013, and well atop the 100.34 in December, according to LCD.
There were six deals that freed to trade at a 101 bid or above in January, the most during a single month in five years: Crown Holdings, Oasis Outsourcing, Flexera Software, Tacala, NFP, and SnapAV.
In another throwback to the early 2013 market: The ratio of downward to upward flexes hit its highest level in five years, illustrating the stubbornly issuer-friendly tenor of today’s market. For the record, in January 2013 there were 26 downward flexes and zero upward flexes; last month, the flex ratio was 25:1.
Another eye-popping figure: The average difference between a loan’s original-issue discount and break price was 83 bps last month, the widest it’s been since April 2016, when the market was turning a corner from a long, dismal stretch of retail withdrawals. (January’s average difference is also much higher than the 66 and 63 bps gap in December and November, respectively.) — Kelsey Butler
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