Institutional loan margins continue to widen in 2019, differentiate more by rating

European Chart of the Week: 12 April 2019

Institutional loan margins trended higher in 1Q19 and are up markedly over the past year amid a repricing of risk.

 

The share of European first lien institutional loans with a margin of 425bps or greater jumped to 55% of deals in 1Q19 versus only 16% in 1Q18 and 20% in 4Q18. On an average basis, first lien institutional loan margins climbed to 421bps in 1Q19, the highest quarterly figure since 2Q16. CLOs continue to be the main drivers of appetite for loans and price levels in the primary market.

Looking more closely at pricing by rating, BB loans averaged 357bps and B credits 439bps in 1Q19. In turn, the average difference between BB and B credits widened to 82bps in the first quarter from 76bps in 2018. While not a large swing, it’s indicative of lenders trying to differentiate pricing more by rating. 

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Colm (C.J.) Doherty Global Head of Primary Market Analysis Debtwire

Colm Doherty is Debtwire’s Global Head of Primary Market Analysis. He is responsible for leading the production of primary market analysis and reports focused on the leveraged loan and high yield bond markets. Prior to joining Debtwire, Colm was Director of Analysis at Thomson Reuters LPC covering leveraged loans, CLOs and high yield bonds.

Colm has a B.A. in Economics & Legal Science from National University of Ireland Galway and an MSc. in Accounting & Finance from Ulster University.

Colm (C.J.) Doherty Global Head of Primary Market Analysis Debtwire

Colm Doherty is Debtwire’s Global Head of Primary Market Analysis. He is responsible for leading the production of primary market analysis and reports focused on the leveraged loan and high yield bond markets. Prior to joining Debtwire, Colm was Director of Analysis at Thomson Reuters LPC covering leveraged loans, CLOs and high yield bonds.

Colm has a B.A. in Economics & Legal Science from National University of Ireland Galway and an MSc. in Accounting & Finance from Ulster University.

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