Senior Loan Talking Points - March 8, 2018

Jeffrey Bakalar

Jeffrey Bakalar

Group Head and Chief Investment Officer, Senior Loans

Dan Norman

Dan Norman

Group Head and Managing Director, Senior Loans

Voya Perspectives Series | Talking Points

  • The S&P/LSTA Leveraged Loan Index (the “Index”) gained 6 bps over the past week.
  • Activity in the primary market accelerated, including a welcome slate of new M&A deals. Overall gross new-issue volume rose to $14.3 billion, compared to $7.5 billion last week.
  • Net of all expected repayments, the amount of net new supply on the forward calendar doubled to $15.1 billion, from $7.8 billion at the last weekly reading.
  • Secondary trading volumes picked up, following last week’s volatilitydriven slowdown. Levels remained generally firm.
  • Issuance in the CLO market continues apace, with two more portfolios pricing. The YTD total now stands at $22.4 billion. Retail loan funds took in $248 million (Lipper FMI universe), a decent increase from very recent trends.
  • There was one default in the Index this week (energy sector).

*S&P/LCD estimate.
Source: S&P/LCD, S&P/LSTA Leveraged Loan Index and S&P Global Market Intelligence
Past performance is no guarantee of future results. Investors cannot invest directly in the Index.

General Risks for Floating Rate Senior Loans: Floating rate senior loans involve certain risks. Below investment grade assets carry a higher than normal risk that borrowers may default in the timely payment of principal and interest on their loans, which would likely cause the value of the investment to decrease. Changes in short-term market interest rates will directly affect the yield on investments in floating rate senior loans. If such rates fall, the investment’s yield will also fall. If interest rate spreads on loans decline in general, the yield on such loans will fall and the value of such loans may decrease. When short-term market interest rates rise, because of the lag between changes in such short term rates and the resetting of the floating rates on senior loans, the impact of rising rates will be delayed to the extent of such lag. Because of the limited secondary market for floating rate senior loans, the ability to sell these loans in a timely fashion and/or at a favorable price may be limited. An increase or decrease in the demand for loans may adversely affect the loans.

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Past performance is no guarantee of future results.

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