Tag Archives: leveraged loans
Navigating Private Credit Liquidity Challenges with Indices
What’s driving insurance companies’ increased allocation to private credit? S&P Global Market Intelligence’s Lynn Bachstetter joins S&P DJI’s Frans Scheepers and State Street Global Advisors’ Bill Ahmuty to explore how indices like the iBoxx Liquid Leveraged Loan Index are helping insurers identify and navigate liquidity challenges in private credit markets.
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Leveraged Loan Market – Growing but Lower Protection?
In a prior blog,[1] we highlighted the return profile and yield of the S&P/LSTA U.S. Leveraged Loan 100 Index. We showed that carry is the dominant driver of returns. In this follow-up post, we review additional characteristics of the senior loan market and its evolution in recent years. The leveraged loan deal size has increased…
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Leveraged Loans in a Rising Rate Environment – Carry Factor Dominates
Since the end of 2015, the U.S. Federal Reserve has raised the policy rate eight times to currently 2.0%-2.25%. The minutes of the recent September FOMC meeting reiterated the committee’s positive growth outlook and confidence on 2% inflation. Market players continued to catch up on pricing future Fed hikes. Currently the market is implying approximately…
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Leveraged Loans Over High-Yield Bonds
As of July 5, 2018, the S&P/LSTA U.S. Leveraged Loan 100 Index returned 2% YTD, compared with the S&P U.S. High Yield Corporate Bond Index’s return of -0.29%. In 2018, U.S. high-yield performance has experienced two rather sizeable negative returns—back-to-back declines in February (-1.05%) and March (-0.45%)—followed by a turnaround in April (see Exhibit 1)….
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Repricings Remain the Story of the Year for Leveraged Loans
Despite three interest rate hikes, record issuance, and a total market size climbing toward the USD 1 trillion mark, the dominating theme for loans in 2017 has been the massive amount of repricings that have occurred throughout the year. As detailed in an earlier blog post, leveraged loans pay a two-part coupon—a market-driven base rate…
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Are Leveraged Loans Losing Their Luster…or Poised to Shine?
Leveraged loans (also called senior loans or bank loans) typically pay a two-part coupon—a market-driven base rate (30-90 day LIBOR) plus a contractual credit spread. As shown in Exhibit 1, the weighted average credit spread of U.S. leveraged loans, as measured by the S&P/LSTA Leveraged Loan 100 Index, has fallen steadily and now sits at…
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LIBOR at 1% for First Time in 7 Years – A Significant Level for Leveraged Loans
For the first time since May 2009, the three-month LIBOR reached 1% on Dec. 29, 2016. LIBOR, which stands for London InterBank Offered Rate, is a benchmark interest rate that most of the world’s largest banks charge each other for short-term loans. The most common rates for which LIBOR is quoted are for overnight, one-month,…
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Three Myths of the U.S. Senior Loan Market
The S&P/LSTA U.S. Leveraged Loan 100 Index has returned 1.76% year to date under performing vs. fixed rate high yield bonds. The low rate environment and continued demand for yield generating asset classes has pushed the S&P U.S. Issued High Yield Corporate Bond Index returns to 4.32% year to date as yields have fallen by…
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The Fed Views a Stronger Economy, Preferred and Investment Grade Corporate Bond Indices Going Strong
Yields on the 10-year Treasury continued lower last week as measured by the S&P/BGCantor Current 10 Year U.S. Treasury Index. Friday’s 2.59% is one basis point off from this year’s low of 2.58% of February 3rd. The index recorded a 2.59% in spite of the fact that the April U.S. Unemployment rate reached a low…
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International events take the front seat
Due to the political issues surrounding Russia and the Ukraine, the yield of the 10-Treasury as measured by the S&P/BGCantor Current 10 Year U.S. Treasury Bond Index tightened by 8 basis points over the course of the last week of February. The index returned 0.39% for the month as the year-to-date is now a 3.94%. Investors…
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