M&A and LBO activity dominates institutional loan issuance

US Chart of the Week, 21 February 2019

Despite leveraged loan issuance posting a sharp decline year-over-year (YoY), the good news for buysiders is that M&A and LBO activity is driving deal flow so far in 2019.

 Institutional loans backing M&A (excluding LBOs) is at USD 18bn year-to-date, with LBO loan volume amounting to USD 13.6bn. These two categories combined represent 87% of institutional loan issuance. Taking a closer look at issuance levels YoY, we see that LBO loan volume is up 54%, while M&A (excluding LBO) volume is down slightly by 2%.

The makeup of loan deal flow stands in sharp contrast to the same period last year, when repricing and refinancing activity was the main engine of issuance, accounting for 64% of volume combined. In comparison, these two categories represent a paltry 3.5% of deal flow this year, proving to be less attractive due to the widening in loan spreads, lower secondary market levels and the relatively weaker market technicals in the midst of outflows from retail loan funds.

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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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