Leveraged Loans

Leveraged Loans


S&P Global Market Intelligence's LCD News is leveraged loan/high-yield bond, distressed debt news/analysis http://www.leveragedloan.com More: @spgmarketintel

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With 0.21% advance yesterday the US #leveragedloan  asset class is returning 2.08% this month and 1.61% YTD. Riskier debt (triple-C loans) has soared in November

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That's $400B in US #highyield  bond issuance YTD, easily a record. At the end of 2019 - pre-COVID, and pre-Fed support programs - Street predictions for 2020 HY issuance was $275B, tops. Full analysis:

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Despite a risk-off tone in 2Q and lighter new issuance overall, lower-rated (B-minus) outstandings now make up a record share of US #leveragedloan  market. Full analysis:

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Issuance of fixed-rate @highyield  bonds in US far outpacing floating-rate #leveragedloan  market in 2020 (the $400B in HY is a record btw)

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S&P: US #highyield  default rate could hit 9% in Sept. 2021 (it was 6.3% in Sept. 2020); credit deterioration "turns a corner" since peaking in April $

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Earnings addbacks: On M&A/LBO loans they've inflated EBITDA by 28% and account for more than half of reported EBITDA at deal inception, leading to "leverage disparity," S&P Global Ratings says $

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A move into June allows pandemic-only look at US #leveragedloan  mart. Those downgrades all are talking about? They've outnumbered upgrades by a surreal 43:1 over past 3 months. In Great Financial Crisis this metric topped out at 8.45:1 @distressedlcd 

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Coranavirus fallout: $672B of $1.2T US #leveragedloan  mart is now categorized as distressed debt. Easily the most ever by amount, but significantly less in share than in '08. "Distressed" here = trading market price of less than 80 cents on dollar

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27 US #leveragedloan  defaults in 2Q20, totaling $23B, the most since 2009. Default rate now stands at 3.23%. That's a five-year high, and up from 1.84% at end of 1Q @distressedlcd 

About a month ago 60% of the $1.2T in outstanding US #leveragedloan  debt was priced at 100 or better. A week ago it was 38%. After today just 10% of that debt is priced at par #COVID19US  #economy 

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The number of US #leveragedloan  issues trading in the secondary below 80 cents on the dollar - a common measure of distress in the asset class - continues to climb

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Nearly 77% of all outstanding US #leveragedloan  debt is covenant-lite. That's (yet another record)

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A new record: 79.6% of the $1.8 trillion in US #leveragedloan  outstandings is cov-lite. That's about $940B. The bulk of that ls riskier debt, from issuers rated B and B-

Cov-lite now accounts for 77% of all US #leveragedloan  outstandings (in a $1T market, remember). That's yet another record

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1Q earnings growth for US loan issuers was negative; that hasn't happened since the recession (free)

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