Looking at the top line figures, it has been a slow start to the year for the Western European leveraged loan market, with issuance through May down 23% year-over-year to EUR 73bn and institutional loan issuance off 25% to EUR 37bn. However, on a more positive note for lenders, institutional loan issuance has increased in each month this year, and when excluding refinancings and repricings, issuance at EUR 28bn is up marginally from last year.

Lenders continue to hope for a pick up in new loan supply, which would give them the opportunity to be more selective and help with portfolio diversification. That said, asset manager size can also make a difference in terms of their view of the supply picture, with one portfolio manager noting: “We are ok. We are big enough to get big enough tickets and small enough not to have multiple funds to feed. It’s a nice sweet spot in a way.”

On the demand side, European new issue CLO volume increased to EUR 2.6bn based on six deals in May. Year-to-date volume now sits at EUR 12bn, which is comfortably ahead of the EUR 10.4bn in the same period last year. Appetite from CLOs has been robust recently, providing the backbone of demand for the loan asset class, with new CLO deals continuing to come to market and issuance topping the amount seen at this point last year. “The CLO arbitrage is challenging, but they can make it work,” says one buysider.

-Colm (CJ) Doherty colm.doherty@acuris.com 

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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.