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Leveraged Loan Funds: Continued Outflows Week Ended February 10

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CLO deals

According to S&P Capital IQ/LCD, one collateralized loan obligation (or CLO) deal worth $348.0 million was priced last week. Year-to-date, CLO issuance stands at $1.17 billion from three deals. Meanwhile, in 2015, CLO deals worth $92.1 billion were struck through 176 deals.

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Leveraged loan funds saw outflows

According to data from Lipper, leveraged loan funds saw an outflow in the week ended February 10, making it the sixth straight week in 2016. The outflows totaled $510 million last week, up from $405 million in the previous week. With the outflows last week, the total net outflows from leveraged loan funds stood at $3.4 billion up to February 10, 2016.

In comparison, high yield bond funds recorded outflows of $1.05 billion while equity funds recorded outflows of $1.5 billion, respectively, last week. Equity funds had witnessed outflows of $6.5 billion in the previous week.

Senior loans are tracked by the mutual funds such as the Oppenheimer Senior Floating Rate Fund – Class A (OOSAX) and the Fidelity Advisor Floating Rate High-Income Fund – Class A (FFRAX).

Leverage loans issuance rose last week. Keurig Green Mountain (GMCR), Vizient, and Endurance International Group Holdings (EIGI) issued leveraged loans last week. You can read more about the primary market activity in leveraged loans in Part 5 of this series.

In the previous week, SolarWinds (SWI), Manitowoc Foodservice, which is a division of The Manitowoc Company (MTW), Acadia Healthcare Company (ACHC), and Mattress Firm Holding Corporation (MFRM) were some of the large issuers of leveraged loans.

Returns on leveraged loans

Returns on leveraged loans fell in the week ended February 12. The S&P/LSTA US Leveraged Loan 100 Index fell 1.1% from a week ago. The index is down by 1.5% year-to-date. Meanwhile, the Fidelity Advisor Floating Rate High Income Fund – Class A (FFRAX), which provides exposure to senior loans, fell 1.0% week-over-week. Year-to-date, the FFRAX has returned -2.3%.

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

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