The outstanding volume of all US leveraged loans, now at $924 billion, has steadily risen.
Since early last year, leverage vs. yield for middle market institutional loans has deteriorated in favor of the issuer.
Second quarter activity in middle market sponsored loans tailed off slightly from the previous quarter, though at $16.2 billion was up from 2Q 2017.
Driven by China and commodities worries in August 2015, loan prices dipped in unison, then recovered, though cov-lite lags.
Despite growing cov-lite activity in the middle market, levels remain below those in early 2014.
Almost three of every four institutional leveraged loans lack a maintenance financial test.
The difference between reported and adjusted ebitda for all M&A related loans has expanded to over 30%.
While quarterly cov-lite volume is on the rise, it’s still a far cry from the heady days of 2014.
The share of cov-lite middle market leveraged loans is growing relative to larger loans; May’s number is over 60%.
The share of middle market buyouts leveraged over six times reached all-time high of 40%; large caps over 60%.