uploads///US Leveraged Loans Flows

Leveraged Loan Fund Outflows Reach Highest Level Yet in 2015


Nov. 20 2020, Updated 10:26 p.m. ET

CLO deals volume falls

Collateralized loan obligation (or CLO) deals fell in volume in the week ended August 21. Three CLO deals worth $1.4 billion came through that week. That’s lower than $1.8 billion in the previous week. Year-to-date, CLO deals worth $71.1 billion have been struck through 133 deals, according to S&P Capital IQ/LCD.

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Leveraged loan funds see outflows

According to data from Lipper, leveraged loan funds saw outflows for the week ended August 19, making it the fourth such successive week. The quantum of outflows was $754 million, the highest so far in 2015, compared to net outflows of $745 million in the previous week.

With those outflows, year-to-date outflows from leveraged loan funds stood at $7.0 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 BKLN’s top holdings.

In comparison, high-yield bond (JNK) (HYG) funds recorded inflows of $111 million, while equity (SPY) funds recorded outflows of $276 million in the week ended August 21. Equity funds witnessed inflows of $936 million in the previous week.

Primary market issuance in the leveraged loans space fell in the week ended August 21. Delta Air Lines (DAL) was the highest issuer of leveraged loans that week. JBS USA, manufacturer and exporter of animal protein products, and US LBM Holdings, a distributor of building materials, were among the biggest issuers of leveraged loans.

In the previous week, Owens-Illinois (OI), ServiceMaster Global Holdings (SERV), and AMAG Pharmaceuticals (AMAG) were among the other large issuers of leveraged loans. You can read more about primary market activity in leveraged loans in Part 5 of this series.

Returns on leveraged loans

Returns on leveraged loans fell in the week ended August 21. The S&P/LSTA U.S. Leveraged Loan 100 Index fell 0.2% from the previous week. The index is up by 0.6% year-to-date. Meanwhile, the PowerShares Senior Loan ETF (BKLN), which provides exposure to senior loans, fell 0.5% week-over-week. Year-to-date, BKLN has returned -0.6%.

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


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