In October, loan issuance shot up to €3.7 billion from €2.3 billion; HY issuance came down to €3.5 billion from €7.2 billion; default rates stabilized. Going forward, no significant changes to the quantative easing policies from the ECB; extremely short window of opportunity before the end of the year.
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November 2012, European Leveraged Loan Market Analysis
1. out
Text
European Leveraged Finance Market Update
November, 2012
Sucheet Gupte - Director
open pause
Text
2. European Market Trends
Text
• Monthly loan issuance shot up to €3.7 billion from €2.3 billion
HY issuance came down to €3.5 billion from €7.2 billion
• Positive fund flows totaled an estimated €664 million for
October, bringing year-to-date to almost €4.6 billion
• Secondary markets up:
- Loan markets rise 60 bps to finish the month at 96.35
- HY markets rise 125 bps to finish the month at 99.97
• The S&P European Leveraged Loan Index (ELLI) finished the
month up at 0.47% (till the week ending October 25th)
• Default rates stabilized during the month
3. European Loan Flow Name Prices
100
99
Text
97
96
94
93
91
2/11 4/11 6/11 8/11 10/11 12/11 2/12 4/12 6/12 8/12 10/12
. Source: LCD - Leveraged Commentary & Data
4. European HY Bond Flow Name Prices
106
102
Text
98
94
89
85
81
2/11 4/11 6/11 8/11 10/11 12/11 2/12 4/12 6/12 8/12 10/12
. Source: Bloomberg
5. ELLI Multi-Currency Loan Return
2.5% October 2012: + 0.47%
Text September 2012: + 0.63%
Jan-Oct 2012: + 7.84%
Jan-Oct 2011: + 0.71%
1.8%
1.1%
0.4%
(0.3%)
(1.0%)
10/11 11/11 12/11 1/12 2/12 3/12 4/12 5/12 6/12 7/12 8/12 9/12 10/12
. Source: S&P European Leveraged Loan Index
6. Volume: New-issue Loans vs. HY Bonds
10
HY bonds
Text
Loans
8
€billions
5 €3.45B
3
€3.68B
0
10/11 11/11 12/11 1/12 2/12 3/12 4/12 5/12 6/12 7/12 8/12 9/12 10/12
. Source: LCD - Leveraged Commentary & Data
7. ELLI Default Rates – European Leveraged Loans
Default Rate by Principal Amount Default Rate by Issuer Count
16% 16%
13% 13%
10% 10%
6% Text
6%
3% 3%
0% 0%
2/09 3/10 4/11 10/12 2/09 2/10 2/11 10/12
. Source: LCD - Leveraged Commentary & Data
8. Themes to watch for
Text
• No significant changes to the quantative easing policies from the ECB
• More inflows into HY funds on the back stability in secondary markets
• Extremely short window for deal opportunity before the end of the year
• A-to-E to continue as issuers seek to address their maturity concerns
• Bond for loan-take-outs
• Issuers from Eurozone peripheral countries continue to access HY markets
• European issuers increasingly go to the US
• Sponsors will look to tap loan demand for recaps and repricings
• Sell-side bankers and sponsors optimistic about M&A during 1Q 2013
9. Text
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