Outflows from Leveraged Loans Funds Continue
No High-Yield Bond Issuance for Second Successive Week
CLO deal volume rises
Collateralized loan obligation (or CLO) deals rose in volume last week. Three CLO deals worth $1.3 billion came through, which was higher than $1.2 billion in the previous week. Year-to-date, CLO deals worth $73.6 billion have been struck through 138 deals, according to S&P Capital IQ/LCD.
Leveraged loans funds see outflows
According to data from Lipper, leveraged loans funds saw outflows for the week ended September 2, making it the sixth such week in succession. The quantum of outflows was $573 million, compared to net outflows of $796 million in the previous week.
With last week’s outflows, the year-to-date outflows from leveraged loans funds stand at $8.3 billion. Senior loans are tracked by the Invesco PowerShares Senior Loan ETF (BKLN) and the Highland/iBoxx Senior Loan ETF (SNLN). Loans of Avago Technologies (AVGO), PetSmart (PETM), and DaVita HealthCare Partners (DVA) are among the top holdings in BKLN.
In comparison, high-yield bond (JNK) (HYG) funds recorded outflows of $227 million, while equity (SPY) funds recorded inflows of $3.9 billion last week. Equity funds witnessed sharp outflows of $17.8 billion in the previous week.
Primary market issuance in the leveraged loans space fell last week. PetroChoice and AccentCare were the only issuers of leveraged loans.
Returns on leveraged loans
Returns on leveraged loans rose in the week ended September 4. The S&P/LSTA U.S. Leveraged Loan 100 Index rose 0.2% from a week ago. The index is up 0.5% year-to-date. Meanwhile, the PowerShares Senior Loan ETF (BKLN), which provides exposure to senior loans, rose 0.3% week-over-week. Year-to-date, the ETF has returned -0.3%.
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