uploads///US Leveraged Loans Flows

Leveraged Loan Funds Witness Back-to-Back Outflows


Apr. 18 2016, Updated 11:07 a.m. ET

CLO deals

According to S&P Capital IQ/LCD, no collateralized loan obligation (or CLO) deals were priced in the week to April 8. Meanwhile, CLO deals worth $451 million were priced in the previous week. No CLO deals have been priced in April so far. Year-to-date (or YTD) CLO issuance stands at $7.1 billion.

US CLO issuance had picked up in March to $4.2 billion from $2.1 billion in February and $827 million in January, according to S&P Global Market Intelligence LCD.

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Leveraged loan funds saw outflows last week

According to data from Lipper, leveraged loan funds saw their second consecutive outflow last week. The outflows came in at $262 million last week. In the previous week, leveraged loan funds had seen outflows of $189 million. Including last week, the total net outflows from leveraged loan funds stood at $5.0 billion up to April 6, 2016.

In comparison, high yield bond funds recorded inflows of $1.2 billion while equity funds recorded inflows of $3.2 billion, respectively, last week. Equity funds had witnessed outflows of $2.6 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 get exposure to senior loans through ETFs such as the Invesco PowerShares Senior Loan Portfolio (BKLN) and the Highland/iBoxx Senior Loan ETF (SNLN).

Leverage loans issuance jumped last week. MGM Growth Properties, a limited liability company of MGM Resorts International (MGM), Diebold Incorporated (DBD), Numericable SFR, and TruGreen were some of the issuers of leveraged loans last week.

In the previous week, Western Digital Corporation (WDC), Capsugel, and Sensus had issued leveraged loans.

Returns on leveraged loans

Returns on leveraged loans rose in the week ended April 8. The S&P/LSTA U.S. Leveraged Loan 100 Index rose 0.4% from a week ago. The index is up by 2.9% year-to-date (or YTD). Meanwhile, the Hartford Floating Rate Fund – Class A (HFLAX), which provides exposure to senior loans, rose 0.3% week-over-week. YTD, the HFLAX has risen 1.9%. The Highland/iBoxx Senior Loan ETF (SNLN), which also provides exposure to senior loans, was up by 0.5% week-over-week. It was up by 2.7% YTD.


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