uploads///US Leveraged Loans Flows

Leveraged Loan Funds Continued to See Outflows Last Week


Mar. 2 2016, Published 4:25 p.m. ET

CLO deals

According to S&P Capital IQ/LCD, four collateralized loan obligation (or CLO) deals for a total volume of $1.7 billion were priced last week. However, in the previous week, no CLO deals were priced. Thus, year-to-date, CLO issuance stands at $2.9 billion from seven 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 24, making it the eighth such successive week in 2016. Outflows totaled $618.0 million last week, up from $604.0 million in the previous week. With the outflows last week, the total net outflows from leveraged loan funds stood at $4.5 billion up to February 24, 2016.

In comparison, high yield bond funds recorded inflows of $2.7 billion while equity funds recorded outflows of $2.8 billion, respectively, last week. Equity funds had witnessed outflows of $5.7 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).

Leverage loan issuance was stable last week. GCA Services Group, Alpha Media, and Vivid Seats issued leveraged loans last week. You can read more about the primary market activity in leveraged loans in part five of this series.

In February 2016, Keurig Green Mountain (GMCR), SolarWinds (SWI), Manitowoc Foodservice, a division of the Manitowoc Company (MTW), and Endurance International Group Holdings (EIGI) were some of the large issuers of leveraged loans.

Returns on leveraged loans

Returns on leveraged loans fell in the week ended February 26. The S&P/LSTA U.S. Leveraged Loan 100 Index fell 0.4% from a week ago. The index is down by 0.9% year-to-date. Meanwhile, the Hartford Floating Rate Fund–Class A (HFLAX), which provides exposure to senior loans, rose 0.3% week-over-week. Year-to-date, the HFLAX has returned -2.5%.

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


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