LCD's European leveraged loan/high-yield bond market analysis - August 2010


Published on

The European loan market rebounded in July and early August, posting positive returns and demonstrating increased appetite/volume for new issues. This video analysis details loan and HY bond activity, including returns, prices, volume, default rates, as well as trends for the months ahead.
Connect with LCD

Published in: News & Politics
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

LCD's European leveraged loan/high-yield bond market analysis - August 2010

  1. 1. Leveraged Loan Update August - 2010 Sucheet Gupte - Associate Director Thursday, August 19, 2010
  2. 2. Copyright 2010 Standard & Poor's, 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 Text part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of S&P. The Content shall not be used for any unlawful or unauthorized purposes. S&P, its affiliates, and any third party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions, regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an "as is" basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES 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 THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable 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 with any 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 are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P’s opinions and analyses do not address the suitability of any security. S&P does not act as a fiduciary or an investment advisor. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain non-public information received 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 securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are pause made available on its Web sites, (free of charge), and and (subscription), and may be distributed through other means, including via S&P publications and third party redistributors. Additional information about our ratings fees is available at Thursday, August 19, 2010
  3. 3. The loan market in July • Buoyant sentiment, as loans post positive returns (0.43% for the month; 5.52% YTD) • New-issues: Loan and HY bond markets see gains during July after dismal June • Forward calendar reaches new heights out • Loans, bonds rebound in secondary market • Default rates continue to ease Thursday, August 19, 2010
  4. 4. European loan flow names - average bid 98 97 95.47 as of 13 August Text 95 94 92 1/7/10 3/4/10 4/29/10 06/27/10 08/13/10 . Source: LCD - Leveraged Commentary & Data Thursday, August 19, 2010
  5. 5. European HY bond flow names - average bid 100 98 95.7 as of 13 August 96 Text 94 92 90 88 1/28/10 2/25/10 3/25/10 4/22/10 5/20/10 6/17/10 7/15/10 08/13/10 Source: Bloomberg . Thursday, August 19, 2010
  6. 6. ELLI Multi-Currency Loan Index Return 7.0% July: +0.43% June: -0.42% YTD: +5.52 4.6% 2.3% (0.1%) Text (2.5%) 2/28/09 8/31/09 2/28/10 07/30/10 . Source: LCD - Leveraged Commentary & Data Thursday, August 19, 2010
  7. 7. Volume: New-issue loans vs. HY bonds 12 HY bonds Loans 9 !billions Text 6 !4.97B 3 !4.54B 0 5/09 7/09 9/09 11/09 1/10 3/10 5/10 7/10 Source: LCD - Leveraged Commentary & Data . Thursday, August 19, 2010
  8. 8. Senior & Mezzanine debt forward calendar !7B 5 Text 3 1 23/01 03/04 12/06 21/08 30/10 08/01 19/03 28/05 06/08 2009 2010 Source: LCD - Leveraged Commentary & Data Thursday, August 19, 2010
  9. 9. ELLI default rates – European leveraged loans by principle amount by number of defaults 13% 17% 9% 13% 6% 9% 6.2% as of 8.94% as of Text 30 June 2010 30 June 2010 3% 4% 0% 0% 12/31/07 7/31/09 06/30/10 12/31/07 7/31/09 06/30/10 . Source: LCD - Leveraged Commentary & Data Thursday, August 19, 2010
  10. 10. Looking ahead • Strong market - New issues and secondary bids • Sponsor-to-sponsor deals emerge as PE firms eye portfolio cos. out • PE sponsors turning to HY bond market re brand new LBOs, as well as existing cos. • Bond-for-loan take-outs, A2E deals and IPOs continue as issuers eye maturity wall Thursday, August 19, 2010
  11. 11. Leveraged Loan Update August - 2010 Sucheet Gupte - Associate Director Thursday, August 19, 2010