06 Aug Voya Senior Loan Group – ‘Talking Points’ Weekly Update (incl. July 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.
August Rush
Rather than settling into an end of summer respite as August often typifies, the loan market furthered its strong run of plentiful activity and healthy technicals through a set of predictable opportunistic and risk-on transactions. The Index returned 0.06%, while the average bid declined a slight three bps to 94.03.
With 22 new deal introductions this week, investors had their pick of a litter of transactions, though M&A undertakings offered in size certainly received the most interest. The forward pipeline is looking detectably better: net new supply expected in market is about $3.8 billion, versus a negative $1.79 billion the week prior. This is the first time since June that new supply has outpaced repayments.
Central to secondary market activity were earnings reports that came out on a variety of issuers. Loan prices remained largely unmoved save for those soaking up earnings news.
July in Review
Robust technical conditions resulting from strong investor demand and a relatively slow forward pipeline spelled a good July return month. The Index returned 1.43% in July, the fifth consecutive month of gains for the asset class (though the slight 0.02% return in June was due to market value declines being offset by interest income). Year to date, the Index has gained 6.00%, which is the strongest return for the first seven months of the year since 2009.
In a sign of the strong market conditions, second lien and lower rated credits performed best, marking a volte-face from June’s preference for higher quality that stemmed from that month’s more volatile market outlook.