Continued from Part 3
Leveraged loans remain resilient
On leveraged loan land (BKLN), the high volatility of the bond markets (BND) doesn’t seem to exist. While high yield bond issuance (JNK) has been up and down depending on the weather, leveraged loans have remained relatively resilient over the past month.
Steady volumes, aggressive issuance
Volumes last week were very robust, with 16 deals pricing a total of $9.3 billion in financing. Year-to-date issuance is almost $400 billion, which dwarfs the $233 billion for the same period in 2012. In fact, all of 2012 priced $465 billion, so it seems very likely that within the next two or three months, that total will be passed.
As in the case of the high yield issuance (HYG) we saw earlier, issuances are starting to seem slightly aggressive. A clear example was the leveraged buyout of CeramTec, which was leveraged to 7.0x total debt to EBITDA (earnings before interest, taxes, depreciation, and amortization). In recent months, anything approaching 5.0x would raise eyebrows, yet this deal was able to price inside the original price talk.
Opportunistic loan issuers walking the line
Continue to Part 5
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