Leveraged Loans: Volume, Trends, Analysis (Europe - September 2011)

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The European leveraged loan and high yield bond markets were on holiday in August and early September. Literally. There was no HY bond activity and only a hint of loan activity, as investors withdrew from market amid the European economic turmoil.


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Leveraged Loans: Volume, Trends, Analysis (Europe - September 2011)

  1. 1. Text European Leveraged Finance Market Update September 2011 Sucheet Gupte - DirectorSunday, September 18, 11
  2. 2. The Market in August • Summer break • Tinkering with deals, re-evaluating portfolios • Sovereign woes, bad economic numbers continue • New issuance: Bonds disappear, leveraged loans only slightly better out • Prices: Leveraged loans – 94; High yield bonds – 92.57 • Loans return neg. 0.84% during month • One bright spot – No defaults in AugustSunday, September 18, 11
  3. 3. European loan flow name prices, 2011 100 94.10 as of 8 September 98 96 Text 94 92 2/18 4/1 5/13 6/23 8/4 9/8 1/7 . Source: LCD - Leveraged Commentary & DataSunday, September 18, 11
  4. 4. European HY bond flow name prices, 2011 105 102 99 97 Text 94 90.89 as 91 of 8 Sept. 88 1/7 3/18 5/27 8/4 9/8 Source: Bloomberg .Sunday, September 18, 11
  5. 5. ELLI Multi-currency loan return (monthly) 3.5% August: - 0.84% Text YTD: + 0.41% YTD ’10: +3.93% 2.4% 1.3% 0.2% (0.9%) 2/10 4/10 6/10 8/10 10/10 12/10 2/11 4/11 6/11 8/11 . Source: LCD - Leveraged Commentary & DataSunday, September 18, 11
  6. 6. New-issue: Loans vs. HY bonds, by month 12 HY bonds Text Loans 9 €billions 6 3 no HY bonds 0 €63M 4/10 6/10 8/10 10/10 12/10 2/11 4/11 6/11 8/11 Source: LCD - Leveraged Commentary & Data .Sunday, September 18, 11
  7. 7. ELLI Default rates – European leveraged loans by principle amount by number of defaults 13% 16% 9% 12% 6% 8% Text 2.62% as of 3.77% as of 31 August 31 August 3% 4% 0% 0% 12/07 8/09 8/10 8/11 8/09 8/10 8/11 . Source: LCD - Leveraged Commentary & DataSunday, September 18, 11
  8. 8. Looking ahead • Sovereign situation eating away at confidence • Loans continue to out-return high-yield bonds, equities out • Investors, arrangers continue at odds • Banks weighing investor incentivesSunday, September 18, 11
  9. 9. Text European Leveraged Finance Market Update September 2011 Sucheet Gupte - DirectorSunday, September 18, 11
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