European Leveraged Loan/HY Bond Market Analysis - October 2010

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The European leveraged loan and high-yield bond markets picked up steam over the past month. Indeed, prices on loans and bonds hit recent highs, and volume - especially in high yield - soared. New this month: a chart detailing issuers whose debt advanced, vs. declining issuers.

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European Leveraged Loan/HY Bond Market Analysis - October 2010

  1. 1. European Leveraged Loan Market Update OCTOBER - 2010 Sucheet Gupte - Associate Director Wednesday, October 20, 2010
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  3. 3. The September Loan Market • Shotgun start: Loans, high-yield bond new issues thrive, secondary surges • Loans return 0.96% in September; 5.1% YTD • Market tone improves, sellside and buyside out • Forward calendar thins from recent highs, but remains well above last two years • Inflows into US funds remains strong, boding well for Europe? Wednesday, October 20, 2010
  4. 4. European Loan Flow Names - 2010 98 96.70 as of 15 October 96 Text 94 3Q2010: 266 bps 92 1/7/10 3/4/10 4/29/10 06/27/10 08/19/10 10/15/10 . Source: LCD - Leveraged Commentary & Data Wednesday, October 20, 2010
  5. 5. European HY Bond Flow Names - 2010 100 100.37 as of 15 October 98 96 Text 94 3Q2010: 679 bps 92 90 88 1/28/10 3/25/10 5/20/10 7/15/10 9/9/10 10/15/10 Source: Bloomberg . Wednesday, October 20, 2010
  6. 6. ELLI Multi-Currency Loan Index Return (quarterly) 17.5% 13.5% 2010 3Q: +1.75% 2Q: - 0.14% 9.5% YTD: +6.14% 5.5% 1.5% Text (2.5%) 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 . Source: LCD - Leveraged Commentary & Data Wednesday, October 20, 2010
  7. 7. ELLI Multi-Currency Loan Index Return (monthly) 7.0% September: +0.96% 4.8% 2.5% 0.3% Text (2.0%) 3/09 6/09 9/09 12/09 3/10 6/10 9/10 . Source: LCD - Leveraged Commentary & Data Wednesday, October 20, 2010
  8. 8. New-Issue Loans vs. HY Bonds, by Quarter 25 HY bonds Loans 19 €billions Text 13 €9.93B 6 €11.52B 0 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 Source: LCD - Leveraged Commentary & Data . Wednesday, October 20, 2010
  9. 9. New-issue Loans vs. HY Bonds, by Month 12 HY bonds Loans 9 €billions Text 6 €4.7B 3 €5.5B 0 7/09 9/09 11/09 1/10 3/10 5/10 7/10 9/10 Source: LCD - Leveraged Commentary & Data . Wednesday, October 20, 2010
  10. 10. Senior & Mezzanine Debt Forward Calendar €7B 5 Text 3 1 01/05 07/08 13/11 19/02 28/05 03/09 2009 2010 Source: LCD - Leveraged Commentary & Data Wednesday, October 20, 2010
  11. 11. ELLI Default Rates – European Leveraged Loans by principle amount by number of defaults 13% 16% 9% 12% 6% 8% 5.33% as of Text 8.62% as of 31 August 2010 31 August 2010 3% 4% 0% 0% 12/31/07 8/31/09 8/10 12/31/07 8/31/09 8/10 . Source: LCD - Leveraged Commentary & Data Wednesday, October 20, 2010
  12. 12. What’s in Store: 4Q Trends • Market tone: best it’s been in two years • Primary calendar expected to grow in 4Q and/or 2011 • High-yield bond volume expected to continue (loans might lag) out Wednesday, October 20, 2010
  13. 13. European Leveraged Loan Market Update October - 2010 Sucheet Gupte - Associate Director Wednesday, October 20, 2010

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