September 2013, European Leveraged Loan Market Analysis
 

September 2013, European Leveraged Loan Market Analysis

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The European leveraged finance primary and secondary markets enjoyed a summer of confidence. Loan issuance was €10.4 billion in July & August 2013, while high yield issuance was just €8.2 billion ...

The European leveraged finance primary and secondary markets enjoyed a summer of confidence. Loan issuance was €10.4 billion in July & August 2013, while high yield issuance was just €8.2 billion for the same period. Secondary markets were up. Default rates were markedly lower.

Check out LCD's new, free web sites, LeveragedLoan.com and HighYieldBond.com

http://www.leveragedloan.com
http://www.highyieldbond.com/

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Video presentation of these slides:
http://youtu.be/M-UxcfCWyJw

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September 2013, European Leveraged Loan Market Analysis September 2013, European Leveraged Loan Market Analysis Presentation Transcript

  • European Leveraged Finance Market Update September, 2013 Sucheet Gupte - Director Text
  • European Market Trends Text • Secondary markets were up: Leveraged loan markets were up 81 bps to finish the month at 99.83; HY markets were up 253 bps to finish the month at 102.45. • The European leveraged finance primary and secondary markets enjoyed a summer of confidence. • Estimated inflows into HY funds were almost €1.6B for July & August versus outflows of €2.4B in June. Net inflows till the end of August are an estimated €1.3B. • Loan issuance was €10.4B in July & August 2013, while HY issuance was just €8.2B. • Default rates were markedly lower. • The ELLI was up both for July and August, with August returns at the highest read so far this year. • 3 new CLOs priced in early August from 3i, Haymarket, and GSO/Blackstone.This adds to July’s tally of 3 from Ares, CSAM, and ICG -- brings theYTD tally to €4.13B.
  • 91 93 94 96 98 99 101 3/11 5/11 7/11 9/11 11/11 1/12 3/12 5/12 7/12 9/12 10/12 12/12 2/13 4/13 6/13 . European Loan Flow Name Prices Text Source: LCD - Leveraged Commentary & Data 8/13
  • . 81 85 89 94 98 102 106 3/11 5/11 7/11 9/11 11/11 1/12 3/12 5/12 7/12 9/12 11/12 1/13 3/13 6/13 8/13 European HY Bond Flow Name Prices Source: Bloomberg Text 5/13
  • -0.4% 0.1% 0.6% 1.0% 1.5% 8/12 9/12 10/12 11/12 12/12 1/13 2/13 3/13 4/13 5/13 6/13 7/13 8/13 . ELLI Multi-Currency Loan Return Text August 2013: + 1.45% July 2013: + 0.39% Jan-Aug 2013: + 4.70% Jan-Aug 2012: + 6.34% Source: S&P European Leveraged Loan Index
  • . 0 5 9 14 18 7/12 8/12 9/12 10/12 11/12 12/12 1/13 2/13 3/13 4/13 5/13 6/13 7/13 8/13 Volume: New-Issue Loans vs. HY Bonds HY bonds Loans €billions Text Source: LCD - Leveraged Commentary & Data €0.3B €0.6B
  • 0% 3% 6% 10% 13% 16% 2/09 2/10 12/11 2/12 8/13 0% 3% 6% 10% 13% 16% 2/09 2/10 2/11 12/11 8/13 . ELLI Default Rates – European Leveraged Loans Default Rate by Principal Amount Default Rate by Issuer Count Text Source: LCD - Leveraged Commentary & Data
  • Themes To Watch For Text • Beyond a certain size / quantum of debt, issuers have to look towards the US market for liquidity and best execution, be that either through loans or bonds. • There is a strong forward calendar for both loans and bonds, as issuers try to lock in favorable rates and terms. • CLO calendar is still strong, though it doesn’t and won’t make up for the shortfall from what will disappear from the market when a number of CLOs go past their reinvestment period. • Risk is back on, as seen by lower default rates and better manufacturing data, however any exogenous event can set things back again.
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