European Chart of the Week: 29th October 2019
The risk premium on leveraged loans has increased further this quarter as pricing has continued to tighten on higher quality loans, while margins on riskier loans have held their ground. Lenders have shown strong appetite for higher quality credits in recent months, with the market share of Ba issuance gaining ground as the year progressed, though single-B issuance still dominates.
The average margin on first-lien institutional loans rated Ba1/Ba2/Ba3 has tightened to 283 bps so far this quarter from 292 bps in3Q19 and 347 bps in 2Q19. In contrast, margins on loans rated B1/B2/B3 have been stable, averaging 397 bps in 4Q19 to date, flat from the 3Q19 level. In turn the margin differential between Ba and single-B credits has widened to 144 bps this quarter from 104 bps in 3Q19 and 65 bps in 2Q19.
It’s a similar story when looking at OIDs, with the average OID on Ba credits tightening to 99.75 in 4Q19 to date from 99.53 in 3Q19,while OIDs on single-B loans have moved in the opposite direction, widening to 99.44 from 99.65.
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 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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