“Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”

In Through the Looking Glass, the Red Queen’s response to Alice’s frustration in running hard yet not getting anywhere mirrors the state of the broadly syndicated loan market today. 

According to PitchBook LCD, overall leveraged loan activity of $736 billion through June 30 was a record high. Yet despite that, new deals were only 13% of total 2Q volume, down from 18% in the first quarter, down from 25% for all of last year, and off sharply from the 52% average for the five years preceding the Fed hike regime in 2022.  

Despite record large cap volume the Morningstar LSTA US Leveraged Loan Index actually shrank by 0.7% over the past twelve months. Imagine where the Index would be without at least some of the new deal activity.