Leveraged Loan Funds Witnessed Inflows Last Week
Why Was Junk Bond Issuance Mild Last Week?
CLO deals
According to S&P Capital IQ/LCD, two CLO (collateralized loan obligation) deals worth $804 million were priced last week. Meanwhile, five CLO deals worth $3.1 billion were priced in the previous week. The CLO issuance stands at $14.9 billion YTD (year-to-date).
Leveraged loan funds saw inflows last week
According to data from Lipper, leveraged loan funds saw inflows last week after five consecutive weeks of outflows. The quantum of inflows was small. It came in at $84 million last week. In the previous week, leveraged loan funds saw outflows of $75 million. With the inflows last week, the total net outflows from leveraged loan funds stood at $5.2 billion up to May 4, 2016.
In comparison, high-yield bond funds recorded outflows of $1.8 billion. Equity funds recorded large outflows of $11.2 billion last week. Equity funds witnessed inflows of $101 million in the previous week.
Senior loans are tracked by mutual funds such as the Oppenheimer Senior Floating Rate Fund – A (OOSAX) and the Fidelity Advisor Floating Rate High Income Fund – Class A (FFRAX). Investors can also get exposure to senior loans through ETFs such as the Invesco PowerShares Senior Loan Portfolio (BKLN) and the Highland/iBoxx Senior Loan ETF (SNLN).
Leveraged loan issuance gained traction last week. McGraw-Hill, ATI Physical Therapy, Telent, and Premiere Global Services (PGI) were some of the issuers of leveraged loans last week.
Returns on leveraged loans
Returns on leveraged loans rose in the week ending May 6. The S&P/LSTA U.S. Leveraged Loan 100 Index was almost flat last week. The index is up by 4.8% YTD. Meanwhile, the Oppenheimer Senior Floating Rate Fund – Class A (OOSAX), which provides exposure to senior loans, rose 0.3% week-over-week. YTD, OOSAX has risen 3.2%. The Highland/iBoxx Senior Loan ETF (SNLN), which also provides exposure to senior loans, was almost flat week-over-week. It was up by 4.2% YTD.
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