September 23 Saw 9 Straight Weeks of Leveraged Loan Fund Outflows



CLO deals remain the same

Collateralized loan obligation (or CLO) deals remained almost the same in the week ended September 23 compared to the previous week. Two CLO deals were struck, resulting in year-to-date issuance standing at $75.8 billion through 144 deals, according to S&P Capital IQ/LCD.

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Leveraged loans funds see outflows

According to data from Lipper, leveraged loans funds saw nine straight weeks of outflows for the week ended September 23. The outflows totaled $257.6 million, compared to net outflows of $350.4 million in the previous week.

With last week’s outflows, the year-to-date outflows from leveraged loans funds stand at $9.1 billion. Senior loans are tracked by the Invesco PowerShares Senior Loan Portfolio ETF (BKLN) and the Highland/iBoxx Senior Loan ETF (SNLN). Loans of Avago Technologies Limited (AVGO), PetSmart (PETM), and DaVita HealthCare Partners (DVA) are among top holdings of BKLN.

In comparison, high yield bond (JNK) (HYG) funds recorded inflows of $17.7 million while equity (SPY) funds recorded outflows of $2.0 billion, respectively, last week. Equity funds had witnessed inflows of $12.7 billion in the previous week.

Cablevision Systems Corporation (CVC), via CSC Holdings, was the highest issuer of leveraged loans. Altice N.V., which is acquiring CVC for $17.7 billion, was the highest issuer of junk bonds last week. Other leveraged loan issuers included Beacon Roofing Supply (BECN) and Hanson Building Products. You can read more about the 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 September 25. The S&P/LSTA US Leveraged Loan 100 Index fell 0.5% from a week ago and is up by 0.05% year-to-date. Meanwhile, the PowerShares Senior Loan Portfolio ETF (BKLN), which provides exposure to senior loans, was down by 0.3% week-over-week. Year-to-date, the ETF has returned -1.1%.

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


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