April 2012, European Leveraged Loan Market Analysis

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After Greece's restructuring, the market regained its confidence and players were willing to again take risks. Inflows and volume were positive, while the secondary market finished the month down a bit.

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April 2012, European Leveraged Loan Market Analysis

  1. 1. TextEuropean Leveraged Finance Market Update April, 2012 Sucheet Gupte - Director
  2. 2. www.LeveragedLoan.com
  3. 3. Market TrendsText The market re-gained its confidence after Greece’s restructuring. Inflows and volume were positive, with a slight drop-off in the secondary market. • The primary markets remained open for both loans and bonds. • With the high yield markets open again, issuers executing bond for loan takeouts. • Default rates ticked higher; expected to rise further during the year.
  4. 4. European Loan Flow Name Prices 100 99 97 Text 96 94 93 91 1/11 2/11 4/11 5/11 6/11 8/11 9/11 10/11 12/11 1/12 2/12 3/12. Source: LCD - Leveraged Commentary & Data
  5. 5. European HY Bond Flow Name Prices 106 102 98 94 Text 89 85 81 1/11 3/11 5/11 7/11 9/11 11/11 1/12 3/12. Source: Bloomberg
  6. 6. ELLI Multi-currency Loan Return (monthly) 3.0% March 2012: + 0.99% Text February 2012: + 0.73% Q1 2012: + 4.36% Q1 2011: + 4.23% 1.8% 0.5% (0.8%) (2.0%) 3/10 5/10 7/10 9/10 11/10 1/11 3/11 5/11 7/11 9/11 11/11 1/12 3/12. Source: LCD - Leveraged Commentary & Data
  7. 7. New-issue: Loans vs. HY Bonds (monthly) 12 HY bonds Text Loans 9€billions 6 €4.7B 3 €2.8B 0 3/11 4/11 5/11 6/11 7/11 8/11 9/11 10/11 11/11 12/11 1/12 2/12 3/12 . Source: LCD - Leveraged Commentary & Data
  8. 8. ELLI Default Rates – European Leveraged Loans Default Rate by Principal Amount Default Rate by Issuer Count 13% 16% 13% 9% 10% 6% Text 6% 3% 3% 0% 0% 2/09 3/10 4/11 3/12 2/09 2/10 2/11 3/12. Source: LCD - Leveraged Commentary & Data
  9. 9. Looking Aheadout A-to-E activity will continue to dominate. Inflows into European loan accounts are still miniscule with high yield accounts getting most of the attention. With the markets open again, banks are willing to underwrite, however M&A activity is still muted. In contrast to the US where default rates are at all time lows, default rates in Europe are expected to move up.
  10. 10. TextEuropean Leveraged Finance Market Update April, 2012 Sucheet Gupte - Director
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