Thanksgiving week in the US capital markets is always a mixed blessing. A wonderful time for families and friends, celebration and gratitude. Yet it’s also smack in the mad year-end rush. Everyone juggling deals and holiday get-togethers – and all running on fumes. Six weeks before, incredibly, it starts all over again.
What will deal activity look like in 2022? Hard to beat 2021. As our friends at S&P LCD noted last week, high-yield bond and leveraged loan issuance set a new annual high of $1 trillion. Also, junk bond AUM topped $1.5 trillion. And the total leverage finance market surpassed $3 trillion.
Finally, as our Chart of the Week depicts, combined syndicated and direct loans set a record $228 billion, topping 2007’s BSL-only mark.
Several causes contributed to this run-up. There’s recognition that broad swaths of the economy, particularly B2B industries, are in great shape. The Fed has vowed to keep rates at rock-bottom until employment returns to pre-Covid levels, and ideally until their bond-buying taper is concluded. Assuming inflation remains contained.