Primary leveraged yields are almost flat in 4Q17 Average primary yields on first-lien institutional term loans have been relatively flat so far in 4Q17. At 5.11%, the average yield assuming a three-year term to repayment on first-lien institutional term loans is just 5bp below 3Q17 levels. However, when looking at the components, yields have been…
Investors have increasingly warmed to riskier issuers since 2016 Since the second half of 2016, investors have increasingly gotten more comfortable with riskier names. According to the Flex Factor, which aggregates price and structural flex activity on institutional loans, B3 rated issuers have seen more issuer friendly changes to their loans now compared to a…
Many BDCs still struggling to trade at book value and higher Investors are getting ready to parse through a slew of BDCs earnings, which will be released this week. Last quarter, many BDCs disappointed with announcements of rising non-accruals, dividend cuts, and declining yields which caused the average price to net asset value per share…
Leverage levels diverged on middle market sponsored deals in 3Q17 When it comes to lending to smaller issuers, bank and non-bank lenders have very different risk tolerances in today’s market. Back in 2013 banks and non-bank lenders both lent to middle market issuers at similar leverage levels. However over time that has diverged due to…
Strong investor appetite supports institutional issuance but tougher credits command better terms Despite robust market technicals including two weeks of retail fund inflows and a steady CLO pipeline, institutional lenders are reconciling strong demand for assets with discipline around credit quality. Roughly $34Bn of institutional loan volume has come to market early in 4Q17 and…
Lender Survey: How are you feeling about portfolio performance? Issuers are showing flat to very slow growth but performance is stable, said 72% of the buyside and sellside respondents in TR LPC’s Quarter-End Survey. The remainder are split with 14% reporting that issuers are showing strong financial performance and growth has picked up while 14%…
1-3Q17 Leveraged loan volume sets new record at $994Bn Amid the traditional summer lull, US syndicated loan issuance slowed meaningfully in 3Q17 to push less than $475B through the market and boosting US totals to $1.75T for the first nine months of the year (and additional US$42B of clubbed loans have also been completed so…
Lender Survey: Are the structural characteristics of loans changing for good? Just over half of the audience gathered during Thomson Reuters LPC’s 23rd Annual Loan & CLO Conference said that structures have not changed for good but rather the pendulum will swing back when credit quality deteriorates. However, just over one fifth disagreed, reporting that…
Toys ‘R’ Us bankruptcy pushes DIP loan issuance to the highest level since 2009 Toys ‘R’ Us launched a US$3.125bn debtor-in-possession (DIP) facility this week after filing for Chapter 11 protection on Monday. If the deal goes through at the launch amounts, it would bring year to date DIP loan issuance to US$7.6bn across 13…
Middle market covenant lite deals exhibit higher leverage than covenanted deals Private equity shops who are purchasing large middle market credits with EBITDA $40M and above have many choices on how to finance their deals. Those sponsors that choose the institutional loan market seem to get the most flexibility. Middle market covenant lite volume has…