uploads///US Leveraged Loans Flows

Did Leveraged Loan Funds Break a 32-Week Streak of Outflows?


Nov. 20 2020, Updated 2:06 p.m. ET

CLO deals

According to S&P Capital IQ/LCD, two collateralized loan obligation (or CLO) deals worth $828.5 million were priced last week. Meanwhile, in the previous week, one CLO deal was priced for $403 million. Thus, on a YTD (year-to-date) basis, CLO issuance stands at $4.1 billion from ten deals. In 2015, CLO deals worth $92.1 billion were struck through 176 deals.

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Leveraged loan funds saw first inflows of 2016

According to data from Lipper, leveraged loan funds saw inflows in the week ending March 9 after 32 consecutive weeks of outflows. However, the amount of inflows was small at $55.0 million last week. In the previous week, leveraged loan funds had seen outflows of $357.0 million. With the inflows last week, the total net outflows from leveraged loan funds stood at $4.8 billion on March 9, 2016.

In comparison, high yield bond funds recorded inflows of $1.8 billion, while equity funds recorded inflows of $4.6 billion last week. Equity funds had witnessed outflows of $2.4 billion in the previous week.

Senior loans are tracked by 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). Investors can gain exposure to senior loans through ETFs such as the Invesco PowerShares Senior Loan Portfolio (BKLN) and the Highland/iBoxx Senior Loan ETF (SNLN).

Leveraged loan issuance fell last week. HCA Holdings (HCA) was the sole issuer of leveraged loans last week.

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In the previous week, KAR Auction Services (KAR), Solera Holdings (SLH), Armstrong World Industries (AWI), and Select Medical Holdings Corporation (SEM) had issued leveraged loans. You can read the details of those issues in our series titled High-Yield Bonds Are Back in Action as Fear of Recession Fades.

Returns on leveraged loans

Returns on leveraged loans rose in the week ending March 11. The S&P/LSTA U.S. Leveraged Loan 100 Index rose 1.1% from the previous week. The index has risen 1.6% YTD. Meanwhile, the Hartford Floating Rate Fund Class A (HFLAX), which provides exposure to senior loans, rose 0.9% week-over-week. HFLAX has fallen 0.6% YTD. The Invesco PowerShares Senior Loan Portfolio (BKLN), which also provides exposure to senior loans, rose 1.0% last week and has risen 1.0% YTD.

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


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