The Market in NovemberText • Uneventful month, Eurozone crisis slows activity. Secondary markets for loans and high yield bonds fall. Risk off, as lenders wind down for the end of the year. • November was an uneventful month for primary loan market activity, dominated by small, club-style transactions. • The high-yield bond market halted, as only three bonds price in November. • Default rates stable in November though most people expect them to rise in the new year.
European loan ﬂow name prices, 2011 100 99 97 Text 96 94 93 91 2/18 4/1 5/13 6/23 8/4 9/15 10/27 12/15 1/7. Source: LCD - Leveraged Commentary & Data
European HY bond ﬂow name prices, 2011 105 101 97 93 Text 89 85 81 1/7 3/11 5/13 7/14 9/15 12/8 Source: Bloomberg.
New-issue: Loans vs. HY bonds, by month 12 HY bonds Text Loans 9€billions 6 3 €0.8B 0 €1.2B 5/10 7/10 9/10 11/10 1/11 3/11 5/11 7/11 9/11 11/11 Source: LCD - Leveraged Commentary & Data .
ELLI Default rates – European leveraged loans by principle amount by number of defaults 13% 16% 9% 12% 6% 8% Text 3% 4% 0% 0% 12/07 9/09 10/10 11/11 8/08 8/09 8/10 11/11. Source: LCD - Leveraged Commentary & Data
European Leveraged Loan Outstandings Maturity Proﬁle As of 2007 As of 2008 As of 2009 As of 2010 As of October 2011 51 Text 34 17 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source:, S&P European Leveraged Loan Index (ELLI).
Looking Ahead• Drastic changes continue in market.• Leveraged ﬁnance issuance down only slightly year over year ...• … though down wildly from the go-go era of 2007. out• Role-reversal continues: bonds issuance continues to dominate loans.• All eyes on Europe• 2012? Volatility is the word, with challenges and opportunities.
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