Unitranche volume grows while deal sizes get bigger

As money continues to pour into the middle market searching for yield, the unitranche structure continues to gain traction. Unitranche volume reached US$13.3bn in 2016, up from US$8.5bn in 2015. Bigger deals were seen in 2016 as more and more lenders continued to build scale and increase their hold size. The average deal size was $198M in 3Q16 and $129M in 4Q16. But 50% of unitranches continue to be in the $0-$100M deal size area...

Non-sponsored MM new money picked up in 2016; refinancings dropped

Non-sponsored lending dropped to US$86bn in 2016 from US$93bn in 2015. In contrast with every other major market segment (overall, leveraged, investment-grade, institutional, middle market sponsored) which witnessed a quarter over quarter increase in volume in 4Q16, non-sponsored middle market lending of US$22bn, was down 7%. Refinancings, the main driver of volume since the credit crisis, were down 21% in 2016 to US$53bn. Most of the refinancings were done in previous years and there was not that much in the form of opportunistic refinancings as pricing has somewhat stabilized in this market...

2016 middle market syndicated loan issuance lowest since 2009

Middle market syndicated loan issuance only reached US$139bn in 2016, down 3% from 2015 levels and the lowest annual level tracked since 2009. Several factors drove the lower levels. The non-sponsored market was the biggest culprit as issuers had no incentive to hit the market to refinance as long term financings were locked in during previous years. Furthermore, slow growth and uncertainty surrounding the economy and macro events such as...

Just shy of US$2tr 2016 US syndicated loan volume is flat year over year

US arrangers pushed almost US$2 Tr through retail syndication in 2016, levels on par with 2015 totals but down modestly compared to the US$2.1tr raised in 2014. The year got off to a slow start as the market volatility that was observed in the oil and gas and commodities sectors in late 2015 carried over to the first quarter of 2016, dampening lender appetite and limiting the pipeline of deals...

2016 MM CLO volume hits highest level post credit crisis

While the upcoming risk retention rules have certainly slowed broadly syndicated CLO volume in 2016, the middle market has bucked the trend. Middle market CLO issuance has reached US$7.7bn so far in 2016, surpassing last year's $5.8bn and reaching the highest level since 2007. This is a pleasant surprise as most managers that took LPC's Middle Market Investor Survey at the beginning of the year were only expecting to see around US $4.5bn in issuance this year...

U.S. CLO portfolio trade prices climb

U.S. CLO portfolio trade prices have climbed from their early 2016 levels. The weighted average purchase was 98.92 in September, with the average sale price at 97.31. For the October trades collected so far, the weighted average purchase price is at 99.24, while selling prices average 97.67. Selling prices were more dispersed than purchase prices in 3Q16, as a higher share of portfolio sales were in the sub-98 and par-plus categories. CLOs sold loans at higher prices in the third quarter, with 50% of sales in the par-plus category, up from 37% in 2Q16...

Primary yields widen slightly so far in November

Yields have widened slightly in November to the highest average since July. The average yield, assuming a three year term to repayment on first-lien institutional loans is in the 5.36% context so far in November, slightly up from 5.1% in October. Demand for loans remains strong, and some issuers continue to successfully tap the market to cut costs, but weaker credits are facing some pushback. In turn, the number of downward and upward price flexes are roughly the same so far this month. In contrast, downward price flexes outnumbered upward price revisions by 2.3 times in October...

European CLO Issuance

Issuance of European CLOs has reached a post-crisis high as jumbo investments in senior tranches have anchored issuance. European CLOs have seen year-to-date issuance of €14.7 billion across 36 deals, compared with the previous post-crisis high of €14.3 billion in 2014, when 34 deals were completed...

Downward flexes dominated in October

Downward flexes continued to dominate flex activity in October. There were 21 downward price flexes on first-lien institutional term loans in October and only 8 upward flexes. Both downward and upward price flexes were down from September which recorded 28 price cuts and 12 upward price revisions...