In the latest Capital Markets View video, LCD’s Taron Wade and S&P Global’s Chris Porter talk about the main trends in the European leveraged loan space during the second quarter, including a comparison with the U.S. market.
Discussed this month:
- Volumes are up globally. To end 2Q18, global loan issuance reached $446 (€381) billion, which is ahead of the same period in 2017.
- M&A is still the fuel. In the U.S., M&A was responsible for 58% of all institutional issuance in 2Q, with a record $84.2 (€71.9) billion. In Europe meanwhile, M&A drove more than 80% of loan activity in 2Q, generating €22.6 ($26.5) of supply.
- This activity is not all sponsor-driven. Corporate M&A has been a big component, with large cross-border deals coming from Cineworld and Stars Group.
- The volume of cross-border deals in the U.S. and European leveraged finance markets is well ahead of where it was this time last year, driven both by larger deals and widely diverging funding rates between the two regions.
- Although headline leverage is not too elevated currently, market players say they continue to see aggressive EBITDA add-backs in deals.
- Institutional investors’ share of the market in Europe still lags behind that of the U.S.
- The ratio of investor-friendly price flexes to issuer-friendly flexes in the U.S. and Europe has risen in recent months.
Taron Wade heads up LCD’s European Research efforts. Chris Porter is Head of Loan Recovery & CLO Business Development, S&P Global.
As ever, please feel free to contact Taron or Chris if you’d like a particular topic discussed in the next video.
Note: Capital Markets View will be on hiatus during August, and will return in September.
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