Why Leveraged Loan Funds Saw Back-to-Back Inflows Last Week



CLO deals

According to S&P Capital IQ/LCD, two collateralized loan obligation (or CLO) deals worth $879 million got priced last week. Two CLO deals worth $804 million were priced in the previous week. The year-to-date (or YTD) CLO issuance stands at $15.8 billion.

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Leveraged loan funds saw inflows last week

According to data from Lipper, leveraged loan funds saw inflows last week for the second consecutive week. The quantum of inflow was higher and came in at $303 million during the week ended May 11, 2016. In the previous week, leveraged loan funds saw inflows of $84 million. With the inflows last week, the total net outflows from leveraged loan funds stood at $4.9 billion up to May 11, 2016.

In comparison, high yield bond funds recorded outflows of $1.9 billion, and equity funds recorded large outflows of $6.1 billion last week. Equity funds witnessed inflows of $11.2 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 also get exposure to senior loans through exchange-traded funds such as the Invesco PowerShares Senior Loan ETF (BKLN) and the Highland/iBoxx Senior Loan ETF (SNLN).

Leveraged loan issuance was slow last week. First Data Corporation (FDC), Russell Investments, and Vectra, formerly known as OM Group, were some of the issuers of leveraged loans last week.

Returns on leveraged loans

Returns on leveraged loans rose in the week ended May 13. The S&P/LSTA US Leveraged Loan 100 Index fell 0.05%. The index has risen 4.8% YTD. The Oppenheimer Senior Floating Rate Fund – Class A (OOSAX), which provides exposure to senior loans, was flat week-over-week. YTD, OOSAX has risen 3.6%. The Highland/iBoxx Senior Loan ETF (SNLN), which also provides exposure to senior loans, fell 0.5% week-over-week. It has risen 3.6% YTD.


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