Debtwire Par: 3Q19 European Leveraged Insights Report

07 October 2019

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3Q 2019 European Leveraged Insights Report highlights key trends in the leveraged loan and high-yield bond markets.

Appetite for leveraged loans and high yield bonds remains strong.

The appetite for leveraged loans and high yield bonds remains robust. On the bond side, there have been inflows into high yield bond funds, while loans have also seen inflows via CLOs and new separately managed account (SMA) money. This appetite is mainly driven by the low/negative rate for longer environment, which has resulted in very strong demand for yield.

On the CLO side, European new-issue volume this year, at EUR 22.2bn, is ahead of the EUR 20.7bn posted in the same period last year. After a quiet August, which saw no deals price, issuance in September got back on track with 5 deals pricing for a total of EUR 2bn.

Despite the appetite for loans, supply is down this year, with leveraged loan volume off 10% at EUR 147bn and the institutional loan segment down 8% to EUR 80bn (and the new money portion down a much larger 20% to EUR 50bn). On a quarterly basis, leveraged loan volume fell to EUR 48bn in 3Q19 from EUR 58bn in 2Q19.

On the other hand, high yield bond volume climbed to EUR 26.9bn in 3Q19, topping the EUR 25.7bn posted in 2Q19. This took year-to-date volume to EUR 63.6bn, a 2% gain over the EUR 62.1bn posted in the corresponding period last year.