August 2012, US Leveraged Loan Market Analysis


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The loan market rallied in July along with the overall bull run in the capital markets. LBO deal flow should increase in mid-September as recent auctions generate new-issue paper. But the as yet unknown outcomes with European debt and US elections make firm prognostications difficult.

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August 2012, US Leveraged Loan Market Analysis

  1. 1. TextUS Leveraged Finance Market Update August, 2012 Steve Miller - Managing Director
  2. 2. S&P/LSTA Index - Average Price97 95 93 91 89 1/11 3/11 5/11 7/11 9/11 11/11 1/12 3/12 5/12 7/12Source: LCD - Leveraged Commentary & Data
  3. 3. S&P/LSTA Index - Average Price vs. S&P 5001,500 S&P/LSTA Index Bid 951,440 94 S&P 5001,380 931,320 921,2601,200 91 1/12 2/12 3/12 4/12 5/12 6/12 7/12 Source: LCD - Leveraged Commentary & Data 2
  4. 4. Visible Loan Flows$6B CLO Issuance Loan Mutual Flows$3B Text$0B-$3B-$6B 6/11 7/11 8/11 9/11 10/11 11/11 12/11 1/12 2/12 3/12 4/12 5/12 6/12 7/12 Source: LCD - Leveraged Commentary & Data, EPFR
  5. 5. S&P/LSTA Index Loans Outstanding $550B$517B$483B$450B 8/11 9/11 10/11 11/11 12/11 1/12 2/12 3/12 4/12 5/12 6/12 7/12 Source: LCD - Leveraged Commentary & Data
  6. 6. Average New-Issue Clearing Yield of First Lien Loans9%8%7%6%5% 1/31 3/11 5/11 7/11 9/11 11/11 1/12 3/12 5/12 7/12Source: LCD - Leveraged Commentary & Data
  7. 7. Dividend-Related Financing Volume $13B Text Bonds Loans$10B $7B$3B$0B 9/11 10/11 11/11 12/11 1/12 2/12 3/12 4/12 5/12 6/12 7/12 Source: LCD - Leveraged Commentary & Data
  8. 8. Loan Default Rate 12%10% 7%5%2%0% 12/98 8/00 4/02 12/03 8/05 4/07 12/08 8/10 7/12Source: LCD - Leveraged Commentary & Data
  9. 9. A few final points• Modest LBO revival post-Labor Day• Geopolitical variables make prognostication difficult
  10. 10. Follow LCDwww.lcdcomps.comnews, analysis, research, Leveraged Loan Group ...9,000+, market Playbook, headlines, video analysis
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