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Leveraged Loans Funds Witness Outflows for Tenth Successive Week

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CLO deals rise

Collateralized loan obligation (or CLO) deals rose in the week ended October 2, 2015, compared to the previous week. Three CLO deals were struck worth $1.9 billion compared to issuance worth $858 million through two deals the previous week. The year-to-date issuance stands at $77.8 billion through 148 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 outflows for the week ended September 30, making it the tenth such successive week. The quantum of outflows was $783.3 million compared to net outflows of $257.6 million in the previous week.

With outflows for the week ended October 2, the year-to-date outflows from leveraged loans funds stand at $9.9 billion. Senior loans are tracked by the Invesco PowerShares Senior Loan Portfolio (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 massive outflows of $2.1 billion, and equity (SPY) funds recorded outflows of $910 million in the week ended October 2. Equity funds witnessed outflows of $2.0 billion in the previous week.

Schumacher Group was the highest issuer of leveraged loans in the week ended October 2. NN (NNBR) was another major issuer of leveraged loans that week.

In the previous week, Cablevision Systems (CVC), Beacon Roofing Supply (BECN), and Hanson Building Products were major issuers of leveraged loans.

Returns on leveraged loans

Returns on leveraged loans fell in the week ended October 2. The S&P/LSTA U.S. Leveraged Loan 100 Index fell 0.9% from the previous week. The index is down 0.9% year-to-date. Meanwhile, the PowerShares Senior Loan Portfolio (BKLN), which provides exposure to senior loans, was down 0.6% week-over-week. Year-to-date, BKLN has returned -1.7%.

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

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