Institutional term loans spreads are back to 2007 levels

Average spreads on first-lien institutional term loans have dropped to their lowest level since 4Q07. The drop has been across the board. The average spread for large corporate issuers is 320bp so far in 1Q18; this is 10bp below their 4Q17 levels and only 8bp above 4Q07’s average of 312bp. In this end of the market, both higher-rated BB-issuers and lower-rated B-issuers have seen spreads tightening.