Loan issuance was up at €7.5 billion in January, while high yield issuance was €7.1 billion. Secondary markets are up, loan markets went up 208 bps to finish the month at 99.42 while high yield markets are down 31 bps to finish the month at 102.64. Default rates fell.
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Leveraged Loans: Volume, Trends, Analysis (Europe - October 2011)
February 2013, European Leveraged Loan Market Analysis
1. out
Text
European Leveraged Finance Market Update
February, 2013
Sucheet Gupte - Director
open pause
Text
2. European Market Trends
Text
• Loan issuance was €7.5B in January 2013, while high yield
issuance was €7.1B.
• Estimated inflows into HY funds were €1.34B for the four
weeks ending January 30th. Inflows for all of 2012 now stands
€7.86B or almost 8 billion euros.
• Secondary markets are up.
Leveraged loan markets went up 208 bps to finish the month at 99.42.
High yield markets are down 31 bps to finish the month at 102.64.
• The S&P European Leveraged Loan Index (ELLI) finished the month up
1.18%.
• Default rates fell lower during the month.
3. European Loan Flow Name Prices
100
99
Text
97
96
94
93
91
1/11 3/11 5/11 7/11 9/11 11/17 1/12 3/12 5/12 7/12 9/12 11/12 1/13
. Source: LCD - Leveraged Commentary & Data
4. European HY Bond Flow Name Prices
106
102
Text
98
94
89
85
81
1/11 3/11 5/11 7/11 9/11 11/11 1/12 3/12 5/12 7/12 9/12 11/12 1/13
. Source: Bloomberg
5. ELLI Multi-Currency Loan Return
2.5%
January 2013: + 1.18%
Text December 2012: + 0.72%
January 2012: + 2.59%
1.9%
1.2%
0.6%
-0.1%
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 1/13
. Source: S&P European Leveraged Loan Index
6. Volume: New-issue Loans vs. HY Bonds
15
HY bonds
Text Loans
11
€7.1B
€billions
8
€7.5B
4
0
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 1/13
. Source: LCD - Leveraged Commentary & Data
7. ELLI Default Rates – European Leveraged Loans
Default Rate by Principal Amount Default Rate by Issuer Count
16% 16%
13% 13%
10% 10%
6% Text
6%
3% 3%
0% 0%
2/09 2/10 2/11 12/11 1/13 2/09 2/10 12/11 2/12 1/13
. Source: LCD - Leveraged Commentary & Data
8. Themes to watch for
Text
• Strong inflows into HY funds result in strong demand for HY issuers.
• Bond for loan-take-outs will continue to keep pace. The vast majority of January’s
borrowers took advantage of HY market liquidity to refi existing debt, raising €5B
of new bonds specifically for this purpose. Half of this paper was used to term-out
loan maturities into bonds, the highest monthly tally since February 2012.
• Peripheral issuers continue to access HY markets. Some have made their tax
regimes far more amenable for issuers than before.
• Sell-side bankers and sponsors are optimistic about M&A, provided there are no
unexpected shocks to the system. There has already been a large loan and high yield
offering for Liberty’s acquisition of Virgin Media.
9. Text
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