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January 2013, US Leveraged Loan Market Analysis


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Loan prices climbed in December on the back of strong technical conditions. Looking ahead, participants expect demand to continue to lead supply in early 2013, allowing the bullish sentiment to persist

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January 2013, US Leveraged Loan Market Analysis

  1. 1. TextUS Leveraged Finance Market Update January, 2013 Steve Miller - Managing Director
  2. 2. Leveraged Loan Volume$550B$440B$330B$220B$110B $0B 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Source: LCD - Leveraged Commentary & Data
  3. 3. S&P/LSTA Index - Average Price9795 93 91 89 1/11 3/11 5/11 7/11 9/11 11/11 1/12 3/12 5/12 7/12 9/12 11/12 12/12Source: LCD - Leveraged Commentary & Data
  4. 4. Visible Loan Flows (Source: LCD, EPFR) $8B CLO Issuance Loan Mutual Flows $6B Text $4B $1B-$1B 11/11 12/11 1/12 2/12 3/12 4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12 Source: LCD - Leveraged Commentary & Data, EPFR
  5. 5. S&P/LSTA Index Loans Outstanding$550B$517B$483B$450B 2/11 4/11 6/11 8/11 10/11 12/11 2/12 4/12 6/12 8/12 10/12 12/12 Source: LCD - Leveraged Commentary & Data
  6. 6. Average New-Issue Clearing Yield of First Lien Loans All-BB All-B 9% 8% 7% 5% 4% 3% 2/11 4/11 6/11 8/11 10/11 12/11 2/12 4/12 6/12 8/12 10/12 12/12 Source: LCD - Leveraged Commentary & Data
  7. 7. Covenant-lite Share of New-issue Loan Volume100%75%50%25% 0% 1/11 2/11 3/11 4/11 5/11 6/11 7/11 8/11 9/11 10/1111/1112/11 1/12 2/12 3/12 4/12 5/12 6/12 7/12 8/12 9/1210/1211/1212/12 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 12/12Source: LCD - Leveraged Commentary & Data
  9. 9. Loan Market - Outlook • Strong indications for demand: > CLOs > Retail flows > Institutional allocations • Deal calendar still light • Macro concerns front and centerSource: LCD - Leveraged Commentary & Data
  10. 10. Follow LCDwww.lcdcomps.comnews, analysis, research, Leveraged Loan Group ...9,500+, market Playbook, headlines, video analysis
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