uploads///US Leveraged Loans Flows

How Leveraged Loan Funds Continue to Witness Outflows


Dec. 4 2020, Updated 10:53 a.m. ET

CLO deals rose

Collateralized Loan Obligation (or CLO) deals rose in value and volume last week. Four CLO deals worth $2.3 billion came through in the week ended November 20. This was higher than the $0.91 billion seen in the previous week. Year-to-date, CLO deals worth $89.7 billion have been struck through 171 deals, according to S&P Capital IQ’s LCD.

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Leveraged loan funds saw outflows

According to data from Lipper, leveraged loan funds saw an outflow for the week ended November 18, making it the 17th such week. The quantum of outflows was $306.2 million last week, rising from $286.8 million in the previous week.

With the outflows last week, the total net outflows from leveraged loan funds rose to $11.7 billion 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 (AVGO), PetSmart (PETM) and Community Health Systems (CYH) are among the holdings in BKLN.

In comparison, high-yield bond funds recorded outflows of $1.4 billion while equity funds recorded outflows of $2.2 billion, respectively, last week. Also, equity funds witnessed outflows of $1.0 billion in the previous week.

The primary market issuance in the leveraged loan space gained traction last week. Belk, TeamHealth (TMH), U.S. Renal Care, and Lannett Company (LCI) were the other large issuers of leveraged loans. 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 November 20. The S&P/LSTA U.S. Leveraged Loan 100 Index fell 0.3% from a week ago. The index fell by 1.3% year-to-date. Meanwhile, the PowerShares Senior Loan Portfolio (BKLN), with its exposure to senior loans, fell 0.4% week-over-week. Year-to-date, the ETF has returned -5.6%.

For more mutual fund analysis, please visit Market Realist’s Mutual Fund page.


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