Leveraged Loan Insight & Analysis – 4/20/2015

Yields on institutional term loans have inched higher so far in April, after dropping in March. The average yield, assuming a three-year term to repayment is 5.66 percent in April, up from 5.28 percent in March. Still April levels are below the 6 percent threshold, which was topped every month since October 2014 until February. Higher yields at the end of last year and the beginning of this year curtailed refinancing activity, and most of the institutional term loans that priced were for M&A purposes. With limited supply, investors jumped in to put their money to work and yields tightened. March saw an increase in refinancings and April has seen an even split of M&A and refinancings so far. There has also been an increase in dividend recap deals as sponsors take advantage of reduced costs to take some money off the table. Despite the slight widening, flex acti1vity has favored issuers so far this month. Downward flexes have outnumbered upward price flexes by 4 times in April.