Distressed percentage accelerates on BDC loans For several years in an asset and yield starved market, BDCs stretched up the risk spectrum in an effort to keep up their lofty dividend yields. As the credit environment becomes tougher this year amid slowing global growth, more cracks are beginning to surface in BDC holdings. So far
BDC leverage on the rise, one tool to combat falling Libor After peaking in December 2018 at over 2.8%, 3-month Libor has since fallen to 1.9% and BDCs are reporting lower weighted average yields in 3Q19 as a result. Following this steep decline, BDCs are taking advantage of their flexibility to increase leverage under the
Average US second-lien secondary bids at lowest levels since 2016 US second-lien loans have traded down considerably in the secondary market over the past few months. The last round of risk-off behavior by secondary market loan players sent second-lien bids as low as the 87.01 level on October 18th, over a five-point decline from the
Total leverage on large corporate US LBO loans remains high in 4Q19, but senior leverage declines At a time when investors have been pushing back on pricing and structure on riskier loans, total leverage on US LBO deals remains high. So far this quarter the average total debt to EBITDA level for large corporate LBO
Flight to quality continues on in the US leveraged loan market Looking at year-to-date average secondary bids along with loan volume highlights the flight to quality seen in the US loan market over the past few months. Corporates with a rating of single-B or lower peaked in 2019 monthly volume with US$24bn back in May.
Recent investor challenged single-B deals have yet to gain traction since breaking in the US secondary market As bifurcation among credits continues, a number of recently launched deals for single-B names received significant investor pushback during syndication. Not surprisingly perhaps, none of these loans have been bid above their break price in the secondary market.
1-3Q19 Sponsored loan volume off 48%; LBO volume at 3-year low Less than US$90bn in syndicated loan volume backing PE sponsor activity was completed in the US market in 3Q19, the third lowest quarterly total in the last three years, and a 30% drop year over year. In turn, less than US$265bn in sponsored loan
1-3Q19 Leveraged issuance down 32%; Institutional volume at 5 year low The 3Q19 leveraged market logged just over US$245B of issuance, flat from year ago levels, to push 1-3Q19 totals to US$762B, the lowest nine month total in seven years. Most of the shortfall can be traced to hints of market stress which have contributed
As Libor declines, Libor floors begin to trickle back As interest rates continue to decline, Libor floors are on investors’ minds once again. As of September 24, the 3-month Libor rate was 2.11%, 69bp below its 2018- year-end level. So far in 3Q19, the average Libor rate is 2.20%, down from 2.51% in 2Q19. If
Sustainability-linked loan volume dominates Green-ESG pipeline Year to date, over US$83bn in global green and ESG linked loan volume has been announced, almost two times year ago levels. Of this total, over 80% or nearly US$67bn is in the form of sustainability or ESG linked loans. Amid global interdepence and heightened awareness of environmental risks