TextEuropean Leveraged Finance Market Update              March, 2012        Sucheet Gupte - Director
Market TrendsText       The market rebounded after a shaky start of the year; as measured by       several key indicators....
European Loan Flow Name Prices    100     99     97                                                Text      96      94   ...
European HY Bond Flow Name Prices    106    102     98     94                                   Text     89     85     81 ...
ELLI Multi-currency Loan Return (monthly)      3.0%                                                   February 2012:     +...
New-issue: Loans vs. HY Bonds (monthly)            12                                                                     ...
ELLI Default Rates – European Leveraged Loans                 Default Rate by Principal Amount                        Defa...
Looking Aheadout      High yield markets open / bond for loan takeouts re-start, thus the        “virtuous cycle” begins a...
Text          Copyright 2012 Standard & Poors, a division of The McGraw-Hill Companies, Inc.No content (including ratings,...
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March 2012, European leveraged loan market analysis

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After a shaky start to the year, the market got its legs back to some extent. High yield bond markets appear to be opening up, and bond for loan takeouts are re-starting, thus enabling the “virtuous cycle.” Still, there is uncertainty due to turmoil in the sovereign markets.

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March 2012, European leveraged loan market analysis

  1. 1. TextEuropean Leveraged Finance Market Update March, 2012 Sucheet Gupte - Director
  2. 2. Market TrendsText The market rebounded after a shaky start of the year; as measured by several key indicators. • The primary markets opened up for both loans and bonds. • With the high yield markets open again, a number of issuers did bond for loan takeouts. • The secondary markets recorded their second gain after a gap of a few months. • Default rates ticked higher, and are expected to rise later this year.
  3. 3. European Loan Flow Name Prices 100 99 97 Text 96 94 93 91 1/11 2/11 4/11 5/11 6/11 8/11 9/11 10/11 12/11 1/12 2/12. Source: LCD - Leveraged Commentary & Data
  4. 4. European HY Bond Flow Name Prices 106 102 98 94 Text 89 85 81 1/11 3/11 5/11 7/11 9/11 11/11 1/12 2/12. Source: Bloomberg
  5. 5. ELLI Multi-currency Loan Return (monthly) 3.0% February 2012: + 0.73% Text January 2012: + 2.19% Jan/Feb 2012: + 3.34% Jan/Feb 2011: + 4.14% 1.8% 0.5% (0.8%) (2.0%) 2/10 4/10 6/10 8/10 10/10 12/10 2/11 4/11 6/11 8/11 10/11 12/11 2/12. Source: LCD - Leveraged Commentary & Data
  6. 6. New-issue: Loans vs. HY Bonds (monthly) 12 HY bonds Text Loans 9€billions 6 €6.0B 3 €2.0B 0 6/10 8/10 10/10 12/10 2/11 4/11 6/11 8/11 10/11 12/11 2/12 . Source: LCD - Leveraged Commentary & Data
  7. 7. ELLI Default Rates – European Leveraged Loans Default Rate by Principal Amount Default Rate by Issuer Count 13% 16% 9% 12% 6% 8% Text 3% 4% 0% 0% 2/09 3/10 4/11 2/12 2/09 2/10 2/11 2/12. Source: LCD - Leveraged Commentary & Data
  8. 8. Looking Aheadout High yield markets open / bond for loan takeouts re-start, thus the “virtuous cycle” begins again • Banks willing to underwrite, credit standards loosening as pressure builds on meeting budgets • Uncertainty in sovereign markets, all hinges on a binary outcome -- Greece defaults or hangs in • Given volatile conditions, default rates expected to rise in 2012
  9. 9. Text Copyright 2012 Standard & Poors, a division of The McGraw-Hill Companies, Inc.No content (including ratings, credit-related analyses and data, model, software or other application or output therefrom) or any Textpart thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in adatabase or retrieval system, without the prior written permission of S&P. The Content shall not be used for any unlawful orunauthorized purposes. S&P, its affiliates, and any third party providers, as well as their directors, officers, shareholders, employeesor agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&PParties are not responsible for any errors or omissions, regardless of the cause, for the results obtained from the use of theContent, or for the security or maintenance of any data input by the user. The Content is provided on an "as is" basis. S&PPARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANYWARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS,SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THECONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties beliable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs,expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection withany use of the Content even if advised of the possibility of such damages.Credit-related analyses, including ratings, and statements in the Content are statements of opinion as of the date they areexpressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investmentdecisions. S&P assumes no obligation to update the Content following publication in any form or format. The Content should notbe relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/orclients when making investment and other business decisions. S&P’s opinions and analyses do not address the suitability of anysecurity. S&P does not act as a fiduciary or an investment advisor. While S&P has obtained information from sources it believes tobe reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of anyinformation it receives.S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivityof their respective activities. As a result, certain business units of S&P may have information that is not available to other S&Pbusiness units. S&P has established policies and procedures to maintain the confidentiality of certain non-public informationreceived in connection with each analytical process.S&P may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of pausesecurities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&Ps public ratings and analyses aremade available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com andwww.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and thirdparty redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees.

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