June 2012, European Leveraged Loan Market Analysis


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The European leverage finance market had a mixed month as a Greek exit from the Eurozone didn’t look implausible and there was a increased pressure on Spanish and Italian sovereign costs.

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

Check out LCD's new, free web site, LeveragedLoan.com

* Leveraged finance job postings
* Online Loan Market Primer
* LCD News
* Market Stats

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June 2012, European Leveraged Loan Market Analysis

  1. 1. TextEuropean Leveraged Finance Market Update June, 2012 Sucheet Gupte - Director
  2. 2. European Market TrendsText • Mixed month for leveraged finance, a “Grexit” not looking implausible • Loan issuance hit a ten-month high of €5.3B • Both loan and high yield bonds bids fell in the secondary • ELLI finished up just 0.1% for month of May • Default rates were up
  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. 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 5/12. Source: Bloomberg
  5. 5. ELLI Multi-currency Loan Return (monthly) 3.0% May 2012: + 0.10% Text April 2012: + 0.26% Jan-May 2012: + 4.63% Jan-May 2011: + 5.56% 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 5/12. Source: S&P European Leveraged Loan Index
  6. 6. New-issue: Loans vs. HY Bonds (monthly) 12 HY bonds Text Loans 9€billions 6 €1.5B 3 €5.3B 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 . 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 5/12 2/09 2/10 2/11 5/12. Source: LCD - Leveraged Commentary & Data
  8. 8. Looking Aheadout • Increased volatility with most high yield market players sitting on the sidelines • Outflows continue from high yield bond funds • Issuers will continue to seek to tap the US market for both loans and bonds • The flow of amend to extend requests from issuers will continue
  9. 9. TextEuropean Leveraged Finance Market Update June, 2012 Sucheet Gupte - Director
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