May 2013, European Leveraged Loan Market Analysis


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Loan issuance was €6.7 billion in April 2013, while high yield issuance was €6.5 billion. Secondary markets were up, loan markets went up 72 bps points to finish the month at 100.58 while high yield markets were up 206 bps to finish the month at 104.63.
Default rates stayed level

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May 2013, European Leveraged Loan Market Analysis

  1. 1. European Leveraged Finance Market UpdateMay, 2013Sucheet Gupte - DirectorText
  2. 2. European Market TrendsText• The S&P European Leveraged Loan Index (ELLI) finished the month up 0.88%.• Loan issuance was €6.7B in April 2013; HY issuance was €6.5B.• Secondary markets were up:loan markets up almost 72 bps points to finish the month at 100.58;high yield markets down 206 bps to finish the month at 104.63.• Estimated inflows into European HY funds was €543M for April.YTD inflows are at €2.9B.• Default rates stayed level.
  3. 3. 9193949698991012/11 4/11 6/11 8/11 10/11 12/11 2/12 4/12 6/12 8/12 10/12 12/12 2/13 4/13.European Loan Flow Name PricesTextSource: LCD - Leveraged Commentary & Data
  4. 4. .8185899498102106211 4/11 6/11 8/11 10/11 12/11 2/12 4/12 6/12 8/12 10/12 12/12 2/13 4/13European HY Bond Flow Name PricesSource: BloombergText
  5. 5. 0%0.4%0.8%1.1%1.5%4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12 1/13 2/13 3/13 4/13.ELLI Multi-Currency Loan ReturnTextApril 2013: + 0.88%March 2013: + 0.91%Jan-April 2013: + 3.70%Jan-April 2012: + 5.19%Source: S&P European Leveraged Loan Index
  6. 6. .04811154/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12 1/13 2/13 3/13 4/13Volume: New-Issue Loans vs. HY BondsHY bondsLoans€billionsTextSource: LCD - Leveraged Commentary & Data€6.5B€6.7B
  7. 7. 0%3%6%10%13%16%2/09 2/10 12/11 2/12 4/130%3%6%10%13%16%2/09 2/10 2/11 12/11 4/13.ELLI Default Rates – European Leveraged LoansDefault Rate by Principal Amount Default Rate by Issuer CountTextSource: LCD - Leveraged Commentary & Data
  8. 8. Themes To Watch ForText• Along with repricings, some sponsors are tabling dividend recap deals to take advantage of investor demand, both inloans and high yield.• CLOs emerge back on the landscape; according to LCD reports, there are 4 vehicles in the pipeline totaling€1.5B. So far this year, 3 vehicles have priced for a total of €964M.• Further spread / yield compression is expected, as loan issuers use access to the high yield markets to reduceexisting spreads.• Still strong demand for high yield bonds, so far this year, net inflows stand at €2.9 billion.• Bond for loan-take-outs will continue to keep pace as issuers address their maturity concerns.
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