Leveraged Loan Recoveries - Middle Market Bests Large-Cap Deals

Like this? Share it with your network

Share

Leveraged Loan Recoveries - Middle Market Bests Large-Cap Deals

  • 314 views
Uploaded on

As institutional investors continue their search for yield, middle market loans - those to smaller borrowers - are increasingly in focus. LCD's Kelly Thompson looks at recoveries on market middle......

As institutional investors continue their search for yield, middle market loans - those to smaller borrowers - are increasingly in focus. LCD's Kelly Thompson looks at recoveries on market middle loans, vs. their large-cap cousins, and finds some surprising results.

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
314
On Slideshare
314
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
10
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Leveraged Loans
 Middle Market Recoveries Best Large-Cap Deals
  • 2. 60 68 75 83 90 81% 74% Large Cap Middle Market Recoveries on Defaulted Loans, 2010-13 Source: S&P Capital IQ/CreditPro loans ≥ $200M loans < $200M
  • 3. 0% 20% 40% 60% 80% 6/13 7/13 8/13 9/13 10/13 11/13 12/13 1/14 2/14 3/14 4/14 5/14 Large Cap Middle Market Covenant-lite, as a share of loan market Source: S&P Capital IQ/LCD This chart: middle market = $350M loan and less
  • 4. 0.0% 3.5% 7.0% 10.5% 14.0% 1/10 5/10 9/10 1/11 5/11 9/11 1/12 5/12 9/12 1/13 5/13 9/13 1/14 5/14 Large Cap Middle Market Leveraged Loan Default Rate 2010-2013 Energy Future Holdings (TXU) 
 - $19.5B Source: S&P Capital IQ/LCD
  • 5. 0.0% 3.5% 7.0% 10.5% 14.0% 1/03 1/04 1/05 1/06 1/07 1/08 1/09 1/10 1/11 1/12 1/13 1/14 Large Cap Middle Market Energy Future Holdings (TXU) 
 - $19.5B Source: S&P Capital IQ/LCD Leveraged Loan Default Rate 2003-2013
  • 6. Overall Leveraged Loan Default Rates • 2010-2013: A period of calm re loan defaults " • At end of 2010, after emerging from credit crisis, overall default rate = 4.5% " • Remained near/below historical lows through 2013 (1.9%) " • Higher defaults for middle market loans? Large cap loans enjoyed looser structures (cov-lite), meaning avoiding default was easier
  • 7. © 2014 McGraw Hill Financial Inc.