Leveraged loan and high yield bond issuance muted so far in 2019

European Chart of the Week, 8 March 2019

Leveraged loan issuance has been muted this year, with buysiders focusing on the limited number of deals to hit the market and using the secondary market to pick up additional paper. 

Looking forward, portfolio managers hope for more loan deal flow, and like in the US, they say that the secondary market is poised to climb further, citing a technical backdrop supported by robust CLO demand and limited loan issuance. On the demand side, the CLO market has started the year relatively strong, with issuance picking up in February and providing steady support and demand for loans.

Leveraged loan volume amounted to EUR 6.9bn in February, taking the year-to-date figure to EUR 11.1bn. The institutional loan market segment is at only EUR 5.7bn this year, after adding EUR 4.4bn in February. Looking at the make-up of this limited deal flow, M&A/LBO activity has accounted for just over half.

High yield bond issuance also started the year slowly, amounting to EUR 5.3bn year-to-date after monthly volume edged higher to EUR 3.2bn in February. Deal flow so far in 2019 is concentrated among higher quality credits, with BB bonds accounting for 90% of issuance.

Further illustrating the quiet start to the year is that high yield bond issuance is off 58% year-over-year, while leveraged loan volume is down 69%.

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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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