TextEuropean Leveraged Finance Market Update                July, 2012        Sucheet Gupte - Director
European Market TrendsText       • Leveraged finance market was cautious in June       • In high yield arena, appetite for ...
European Loan Flow Name Prices    100     99     97     96                                           Text     94     93   ...
European HY Bond Flow Name Prices    106    102     98      94                                    Text      89          85...
ELLI Multi-Currency Loan Return (monthly)      3.0%                                                   June 2012:       + 0...
New-issue: Loans vs. HY Bonds (monthly)            12                                                         HY bonds    ...
ELLI Default Rates – European Leveraged Loans                 Default Rate by Principal Amount                        Defa...
Looking Aheadout      • The European sovereign crisis finale not yet played, we are        still some distance from the clo...
Text          Copyright 2012 Standard & Poors, a division of The McGraw-Hill Companies, Inc.No content (including ratings,...
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July 2012, European Leveraged Loan Market Analysis

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The European leverage finance market was cautious in June with the markets being driven by fundamental credit selection rather than technicals.

In this month's analysis:
* Loan flow name prices
* High yield bond flow name prices
* ELLI loan returns
* New-issue loans vs high yield bond volume
* ELLI default rates, European leveraged loans
* Trends for the months ahead


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* Online Loan Market Primer
* LCD News
* Market Stats

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Transcript of "July 2012, European Leveraged Loan Market Analysis"

  1. 1. TextEuropean Leveraged Finance Market Update July, 2012 Sucheet Gupte - Director
  2. 2. European Market TrendsText • Leveraged finance market was cautious in June • In high yield arena, appetite for well-established 4B rated issuers • Loan issuance slid from €5.3 billion to €2.5 billion • Loan prices fell in the secondary market; high yield bond prices rose • Default rates rose during the month
  3. 3. European Loan Flow Name Prices 100 99 97 96 Text 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 4/12 5/12 6/12. Source: LCD - Leveraged Commentary & Data
  4. 4. 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 6/12. Source: Bloomberg
  5. 5. ELLI Multi-Currency Loan Return (monthly) 3.0% June 2012: + 0.29% Text May 2012: + 0.10% Jan-June 2012: + 4.93% Jan-June 2011: + 4.31% 1.8% 0.5% (0.8%) (2.0%) 2/10 4/10 6/10 8/10 10/10 12/10 2/11 4/11 6/11 8/11 10/11 12/11 2/12 4/12 6/12. Source: S&P European Leveraged Loan Index
  6. 6. New-issue: Loans vs. HY Bonds (monthly) 12 HY bonds Text Loans 9€billions 6 3 €1.48B €2.5B 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 4/12 5/12 6/12 . Source: LCD - Leveraged Commentary & Data
  7. 7. ELLI Default Rates – European Leveraged Loans Default Rate by Principal Amount Default Rate by Issuer Count 16% 16% 13% 13%10% 10% 6% Text 6% 3% 3% 0% 0% 2/09 3/10 4/11 6/12 2/09 2/10 2/11 6/12. Source: LCD - Leveraged Commentary & Data
  8. 8. Looking Aheadout • The European sovereign crisis finale not yet played, we are still some distance from the closing credits • Possible inflows into high yield bond funds on back of interest rate cuts by ECB; tentative stability in the secondary markets • A-to-E to continue: issuers seek to address maturity concerns, though issuers that come to market are weaker • Issuers will continue to seek to tap US market for both loans and bonds, market permitting
  9. 9. Text Copyright 2012 Standard & Poors, a division of The McGraw-Hill Companies, Inc.No content (including ratings, credit-related analyses and data, model, software or other application or output therefrom) or any Textpart thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in adatabase or retrieval system, without the prior written permission of S&P. The Content shall not be used for any unlawful orunauthorized purposes. S&P, its affiliates, and any third party providers, as well as their directors, officers, shareholders, employeesor agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&PParties are not responsible for any errors or omissions, regardless of the cause, for the results obtained from the use of theContent, or for the security or maintenance of any data input by the user. The Content is provided on an "as is" basis. S&PPARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANYWARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS,SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THECONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties beliable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs,expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection withany use of the Content even if advised of the possibility of such damages.Credit-related analyses, including ratings, and statements in the Content are statements of opinion as of the date they areexpressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investmentdecisions. S&P assumes no obligation to update the Content following publication in any form or format. The Content should notbe relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/orclients when making investment and other business decisions. S&P’s opinions and analyses do not address the suitability of anysecurity. S&P does not act as a fiduciary or an investment advisor. While S&P has obtained information from sources it believes tobe reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of anyinformation it receives.S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivityof their respective activities. As a result, certain business units of S&P may have information that is not available to other S&Pbusiness units. S&P has established policies and procedures to maintain the confidentiality of certain non-public informationreceived in connection with each analytical process.S&P may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of pausesecurities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&Ps public ratings and analyses aremade available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com andwww.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and thirdparty redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees.

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