U.S. leveraged loan issuers took a breather in April: the $32.4 billion in institutional activity recorded during the month was down 38% from the $52 billion in what was a busy March, according to LCD. Including pro rata credits, U.S. leveraged loan issuance totaled $53.7 billion last month, down 23% from $69.8 billion the previous month.
Covenant-lite accounted for $25.6 billion of the institutional issuance last month—that’s 79%—in line with YTD activity.
Riskier issuers remained active in April. Single-B borrowers accounted for 74% of all institutional activity, continuing a trend seen throughout 2018. YTD these lower-rated issuers account for nearly 65% of all institutional issuance.
M&A was the main driver of April institutional activity, accounting for 56% of new issuance, with the bulk coming from corporate mergers/acquisitions, and sponsored add-on acquisitions. Buyouts alone accounted for just $5 billion of institutional volume, down 45% from March. Refinancings declined as well, down 50%, to just $10.6 billion in April.
The primary market was slower overall. Repricings—the majority of which do not count toward volume—totaled $40.7 billion last month. While still considerable, that’s well off the 2018 high of $57.7 billion in March, according to LCD.
Institutional issuance in the year to date is $162 billion, nowhere near the $223 billion in the first four months of 2017. Of course, 2017 ended with a record $503 billion of institutional issuance. — Staff reports
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