Leveraged loans continuing to plow ahead (Part 1 of 3)
The leveraged loan market’s strong volume momentum continues amid opportunistic refinancing
Leveraged loans (BKLN) issuance more than doubled last week, boosted by increased investor interest in fixed income.
Corporate bonds (BND) offer less risk but lower yield, and high yield bonds offer a higher yield but higher risk both in terms of rating and interest rate sensitivity. Leveraged loans (BKLN) present a very attractive proposition for investors wanting to reduce interest rate sensitivity but maintain a decent yield.
Volumes spike up over 240%
Last week, the amount of new issuance in the leveraged loan market (BKLN) increased to $22.5 billion across 22 deals, up from $9.2 billion the week before. Year-to-date issuance volume is $410 billion, compared to $244 billion for the same period in 2012.
Large drivers of the new issuance were refinancing and repricing, as issuers went to market to lower the cost of existing debt on their books. A lot of the activity was refinancing. Last week, 12 of the 22 transactions priced were refinancing or repricing.
Read on to see the loan fund flows for the week and learn the difference between a refinancing and a repricing.
Other articles in this series
- Part 2 - Must-read: Impact of re-investment risk on leveraged loans
- Part 3 - How to play Fed rate risk with bonds
- Investment & Company Information