04 Jun Voya Senior Loan Group – ‘Talking Points’ Weekly Update (incl. May in Review)
Voya Senior Loan ‘Talking Points’ is a weekly publication from the Voya Senior Loan Team Heads, which provides key insights and results in the Senior Loan marketplace.
Gearing Up for Summer
The short post-Memorial Day week experienced tightened pricing for a series of successful new issue transactions due to high demand stemming from strong technicals and a continued light forward calendar. The Index was up 0.19% on the week.
The primary market demonstrated its demand bias with Single B average institutional yields falling from 5.69% to 5.56%. Across the secondary, par loans continue to trade in a tight range. The average price at which first-lien institutional loans entered the secondary reached a ten-month peak at 99.82%.
May in Review
May built upon the generally improving strength of the loan market, based primarily on increased demand for the asset class. While improvements were more modest than the large gains experienced in March and April, the Index nonetheless gained 0.89%, and YTD returns are now 4.49%.
Looking ahead, we expect the summer to look much like the spring. In the secondary market, loans trading at par or above (now a full 32% of the Index) have little room for additional upside, while the 64% trading at 99 or higher are likewise nearing their apex bids. While loans at the low end of the credit spectrum continue to rally, they have a higher risk profile and remain prone to volatility from macro and sector-specific events.