Leveraged loan margins widen YoY on back of larger share of B rated credits

Institutional loan issuance is off to a slow start this year, with deal flow totaling EUR 5.3bn, compared to EUR 17bn in the same period last year. On top of this, pricing in the primary market is noticeably higher, with first lien institutional loan margins on euro loans averaging 396bps, up from 357bps in the year ago period.


Looking more closely, we see that the 400bps margin category is the most popular price point in 2019, accounting for 38% of volume. At the upper end, another 34% of deal flow has a margin in the 425-plus area versus 13% in the same period in 2018. The difference in pricing dispersion is even more pronounced at the lower end, with 28% of issuance having a margin of 375bps or below, compared to 66% a year earlier.

Contributing to the higher pricing levels this year is a larger share of single-B rated loans, with issuance heavily concentrated in this category. That said, even when controlling for credit rating, pricing in the first two months of 2019 is still higher, with margins on B credits averaging 411bps year to date versus 396bps a year ago.

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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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