04 Mar Voya Senior Loan Group – ‘Talking Points’ Weekly Update (incl. February 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. Contact Breakwater Advisory for more information.
‘Solid Gains’ – Weekly Update
Bank loans in the S&P/LSTA Leveraged Loan Index returned 0.26% in a week that delivered a boost in the forward pipeline and an uptick in refinancing activity. The average bid for loans was 98.46, which marked an 18 bps bump.
After contracting to a level at which repayments outstripped supply by $10.61 billion, net new issue volume increased again, to $303 million, when factoring in anticipated repayments not associated with the forward calendar. Refinancing was up by 36%, to $5.5 billion, while the $3.9 billion of merger and acquisition transactions was lighter than last week’s $7.7 billion. Yields to maturity are still moving up despite two months of active repricings. Some M&A deals have seen yields in the 7% range, while the Single B average increased from 5.05% to 5.23%.
February in Review
The Index gained 0.50% in February, bringing the YTD return for loans to 1.06%. The gain was down slightly from January’s 0.56% and the 0.81% average monthly return over the past year. Nonetheless, U.S. loans have now enjoyed positive performance for twelve straight months, which is the longest run in the black since the year ending May 2013. February’return was the third lowest after last June and November.
The recent shift into a lower gear was not unexpected.