uploads///US Leveraged Loans Flows

Why Did Leveraged Loan Funds See Inflows Last Week?


Jun. 2 2016, Published 3:05 p.m. ET

Collateralized loan obligation deals

According to S&P Capital IQ/LCD, three collateralized loan obligation (or CLO) deals worth $1.1 billion got priced last week. In the previous week, three CLO deals worth $1.4 billion were priced. The year-to-date (or YTD) CLO issuance stands at $18.7 billion.

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Leveraged loan funds saw inflows last week

According to data from Lipper, leveraged loan funds saw inflows last week after seeing outflows in the previous week. The quantum of inflow was small, coming in at $63 million in the week ended May 25, 2016. In the previous week, leveraged loan funds saw outflows of $139 million. Even with the inflows last week, the total net outflows from leveraged loan funds stood at $4.9 billion up to May 25, 2016.

In comparison, high-yield bond funds recorded outflows of $562 million last week. Equity funds recorded large outflows of $4.8 billion. Equity funds saw outflows of $3.9 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 take exposure in senior loans through ETFs such as the PowerShares Senior Loan ETF (BKLN) and the Highland/iBoxx Senior Loan ETF (SNLN).

Leverage loans issuance skyrocketed last week. MultiPlan, Station Casinos, B/E Aerospace (BEAV), and Zebra Technologies (ZBRA) were some of the issuers of leveraged loans.

Returns on leveraged loans

Returns on leveraged loans rose in the week ended May 27. The S&P/LSTA US Leveraged Loan 100 Index rose 0.4%. The index has risen 5.5% year-to-date (or YTD).

The Oppenheimer Senior Floating Rate Fund – Class A (OOSAX), which provides exposure to senior loans, rose 0.5%, week-over-week. YTD, OOSAX has risen 4.3%. The Highland/iBoxx Senior Loan ETF (SNLN), which also provides exposure to senior loans, rose 0.2% week-over-week. It has risen 4.1% YTD.


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