State of the Loan Market (Third of a Series)

Besides the Annual LSTA Conference, the other recent industry gathering of note was the Creditflux CLO Conference in NY. The focus here was trends in structured finance, from both issuer and investor perspectives.

Collateral loan obligations, as we’ve covered in a special series [link], represent the majority of loan buyers in the broadly syndicated market. Assuming almost $950 billion in the leverage loan universe, roughly half is in the hands of CLO vehicles. That’s close to $500 billion of loan demand.

As our Chart of the Week shows, other funds, including separate managed accounts, are a fast growing category of institutional investors for leveraged loans. Sources estimate that SMAs are now around $140 billion of demand for floating-rate assets...

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QUOTE OF THE WEEK

“The absence of covenants reflects the relative strength of issuers at the negotiating table.”
–Oleg Melentyev, head of high-yield credit strategy, BAML.

Chart of the Week: Growing the Pie

Collateralized loan obligations are still hold the majority of leverage loans, with separate managed accounts on the rise.

Lead Left Spotlight

Daniel Winick & Andrew Young

Partner | Senior Associate

Clifford Chance

"Cov-lite has become a movement against the traditional banking philosophy of providing only for the needs of the business."

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Tim Hopper

Founder

Macro Fund Advisors

"Corporate debt issuance is on the rise and all investors are crammed into ever riskier and scarce high yield instruments."

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Niels Bodenheim

Senior Director of Debt Research

bfinance

"Private markets are certainly one of the fastest growing categories. Within that, private credit is the biggest contributors to that growth."

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Ilan Nissan

Senior Partner

Goodwin Procter

"Lenders are falling over themselves to provide aggressive terms."

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Stephen Boyko

Partner

Proskauer

"Even the direct lenders who are offering the most aggressive terms want covenants when they hold a good chunk of the deal."

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Jason Block & Fred Buffone

Partner and Chief Investment Officer | Principal

Freedom 3 Capital

"We want to create a capital structure that works for the business plan."

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