uploads///US Leveraged Loans Flows

Analyzing Secondary Market Trends in Leveraged Loans


Nov. 20 2020, Updated 12:51 p.m. ET

CLO deals slowed

CLO (collateralized loan obligation) deals were still strong last week. Four CLO deals totaling $2.3 billion came through in the week ending April 3. The previous week, six deals totaling $3.3 billion had been priced. First quarter CLO issuance stood at $29.3 billion, according to S&P Capital IQ/LCD. The issuance volume is the highest quarterly issuance on record. It’s higher than the previous record of $26.3 billion in 1Q13.

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Outflows quicken in leveraged loan funds

According to data from Lipper, leveraged loan mutual funds continued to see outflows in the week ending April 3. The total outflow was $445 million. It was higher than a net outflow of $288 million in the previous week.

Last week brings the total net outflows from leveraged loan mutual funds to $4.9 billion YTD (year-to-date). Senior loans are tracked by the Invesco PowerShares Senior Loan Portfolio (BKLN) and the Highland/iBoxx Senior Loan ETF (SNLN). Loans of Avago Technologies Ltd (AVGO), Charter Communications (CHTR), and Community Health Systems (CYH) are among BKLN’s holdings.

Last week, high-yield bond (JNK) (HYG) funds recorded inflows of $315 million. Equity (SPY) funds recorded massive outflows of $11.2 billion, respectively. Inflows in equity funds stood at $5.7 billion in the previous week.

The primary market activity slowed down in the week. The week was shorter due to the Good Friday holiday on April 3. Penn Products Terminals was the highest issuer. Allison Transmission Holdings (ALSN), Men’s Wearhouse (MW), and Nortek (NTK) were also among the noteworthy issuers. You can read more about the primary market activity in Part 5 of this series.

Returns on leveraged loans

Returns on leveraged loans trended up in the week ending April 3. The S&P/LSTA U.S. Leveraged Loan 100 Index rose by 0.1% over the week ending April 3. The index is up by 1.9% YTD. Meanwhile, the Invesco PowerShares Senior Loan Portfolio (BKLN) provides exposure to senior loans. It was up by 0.6% week-over-week on April 2. It was up by 1.3% YTD.

For more bond market trends and analysis, please visit Market Realist’s Fixed Income page.


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