Leveraged loan activity downshifted in the second quarter as eroding macro conditions sapped the market’s technical strength, in large part by stifling the takeout trade.

Higher clearing yields put a damper on new-issue volume, which contracted 25% in the second quarter, to $85.5 billion, from $114.1 billion in the first quarter. In the institutional segment, the decline was milder, at 17%, from $67.9 billion to $56.6 billion.

This analysis is taken from LCD’s full wrap up of second-quarter 2012 leveraged finance market activity. That analysis is available to LCD subscribers here.