Leveraged Loans
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Part of PitchBook Data, LCD is news and analysis on leveraged loans/private credit, high-yield bonds, distressed debt. Check out free news & analysis below.
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Corporate defaults worldwide are emerging at their fastest pace since 2009, with 15 in February alone, S&P says. The Retail sector is the biggest culprit, accounting for more than 30% of the 2023 global default tally
#leveragedloan
#highyield
4
73
154
The number of US
#leveragedloan
issues trading in the secondary below 80 cents on the dollar - a common measure of distress in the asset class - continues to climb
2
49
101
A move into June allows pandemic-only look at US
#leveragedloan
mart. Those downgrades all are talking about? They've outnumbered upgrades by a surreal 43:1 over past 3 months. In Great Financial Crisis this metric topped out at 8.45:1
@Kakourisr
4
52
87
About a month ago 60% of the $1.2T in outstanding US
#leveragedloan
debt was priced at 100 or better. A week ago it was 38%. After today just 10% of that debt is priced at par
#COVID19US
#economy
4
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86
"Bankruptcies among private companies with at least $10 million in assets had jumped to an average of 7.8 each week by late February, a stark increase from the pandemic peak of 4.5 in June 2020 ..." via BBG
#defaults
4
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Nearly 77% of all outstanding US
#leveragedloan
debt is covenant-lite. That's (yet another record)
2
56
74
A new record: 79.6% of the $1.8 trillion in US
#leveragedloan
outstandings is cov-lite. That's about $940B. The bulk of that ls riskier debt, from issuers rated B and B-
2
45
73
Maturity wall update: The amount of
#leveragedloan
debt due in the next 2 years is larger than ever, and roughly half of that are riskier, B-minus rated credits (better-quality borrowers have refinanced already)
@Kakourisr
@PitchBook
3
25
71
Coranavirus fallout: $672B of $1.2T US
#leveragedloan
mart is now categorized as distressed debt. Easily the most ever by amount, but significantly less in share than in '08. "Distressed" here = trading market price of less than 80 cents on dollar
2
60
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More on debt coverage: Moody's says better than half of riskier, B3 (B-minus) rated corporates will have interest coverage of less than 1x in 2023-24. That's a ratio many analysts say indicates weak financial health
#leveragedloan
#highyield
@PitchBook
1
24
67
That's 18 bankruptcies among private equity portfolio companies so far in 2023, the fastest pace since 2020. One reason: The Fed has been raising rates (making debt more expensive), from near zero in March 2022 to 5.25% today
@PitchBook
#leveragedloan
1
18
64
1Q earnings growth for US loan issuers was negative; that hasn't happened since the recession (free)
3
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27 US
#leveragedloan
defaults in 2Q20, totaling $23B, the most since 2009. Default rate now stands at 3.23%. That's a five-year high, and up from 1.84% at end of 1Q
@Kakourisr
0
40
63
Banking Crisis Raises Concerns About Hidden Leverage in the System
Via BBG
#leveragedloan
#highyield
#PrivateCredit
5
28
61
Covenant-lite share of US
#leveragedloan
outstandings continue to hold at ~79%. That's roughly $950B of what's now a $1.2T market
2
34
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S&P Global Ratings: US
#highyield
default rate expected to hit 10% over next 12 months (it was 3.1% at year-end 2019
#leveragedloan
2
28
58
After record month of downgrades, riskier, triple-C rated debt accounts for 7.48% of US
#leveragedloan
market. That's an interesting number: Most CLOs have 7.5% threshold for CCC debt. Full analysis
@millarlr
0
21
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What with soaring stock markets and bulging private equity coffers we'll note that purchase price multiples on US LBOs hit a record 11.51x in 2019. They were 10.6x the previous year and 9.68x in 2007
#leveragedloan
#highyield
2
27
53
You knew it would be bad, but this is something: US
#leveragedloan
debt slides 2.73% today, far and away the biggest daily loss since the Financial Crisis (and nearly the largest ever). YTD: -4.48%
1
42
56
Cov-lite now accounts for 77% of all US
#leveragedloan
outstandings (in a $1T market, remember). That's yet another record
7
44
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The riskiest US
#leveragedloan
issuers (B-minus) now account for the largest share of the $1.425 trillion asset class, the first time that's ever been the case. Full analysis:
@Kakourisr
#highyield
5
18
55
Ouch. Investors yank $3.3B from US
#leveragedloan
funds over the past week. That's yet another record withdrawal. The past two weeks: -$5.8B
4
41
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With seven US
#leveragedloan
defaults in May (so far), that's nearly $10B in defaulted debt, the most for a month since TXU/Energy Future Holdings' massive $20B event in 2014
@Kakourisr
1
27
52
S&P expects US
#highyield
default rate to hit 12.5% by next March. That would mean 233 speculative-grade issuers would have defaulted. At the end of April the rate was 4.1%
3
23
49
Retail investor cash flood into US
#highyield
funds (cont'd): +$5.7B over past week, +$41.3B since April 1. The US
#leveragedloan
market, which did not see meaningful Fed support: -$15.6B YTD $HYG $JNK $BKLN
3
16
53
Purchase price multiples YTD on US LBOs now stands at 11.5x, topping pre-crisis levels. Private equity shops have been digging deeper for equity, however, keeping overall leverage on these deals relatively in check. Full analysis:
#leveragedloan
1
29
50
The number of "Weakest Links" - US
#leveragedloan
issuers rated B- or lower and on negative outlook per S&P Global - easily hit an all-time high in 4Q19. The biggest reason for the latest increase: Downgrades
1
19
49
US banks held roughly $99B in CLOs at the end of 2020's first quarter, with JPM, Wells, Citi carrying the bulk of that amount
#leveragedloan
@ajsaeedy
3
22
47
Coronavirus uncertainly has levels of distressed debt in Europe's
#leveragedloan
market at highest point since 2008. The rate of increase was record-breaking
@IsabellWitt1
0
28
48
Btw, the amount of outstanding US
#leveragedloan
paper rated triple-C topped $100B in April, thanks in large part to a torrent of credit downgrades. CLOs, of course, have limits on how much CCC debt they want to hold
#Covid_19
1
23
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That's 18 bankruptcies among private equity portfolio companies so far in 2023, the fastest pace since 2020. One reason: The Fed has been raising rates (making debt more expensive), from near zero in March 2022 to 5.25% today
@PitchBook
#leveragedloan
1
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Some $37B in US
#highyield
issuance last month, one of the busiest Aprils ever, as Fed's safety net to catch fallen angels bolsters market sentiment
1
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S&P: Despite a relatively innocuous July the global corporate default tally has hit 91, more than double the amount at this point last year and well above the 10-year average.
#leveragedloan
1
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Before the coronavirus, the probability of default for a US restaurant was 5%. Today, after lockdowns and a shuttered economy, it's nearly 25% per
@SPGMarketIntel
0
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There were 11 defaults in US
#leveragedloan
market in April. That's the most ever. The default rate remains below historical norm, but with ongoing flood of credit downgrades and
#COVID__19
, investors are buckling up $
0
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43
Today's 3.08% slide in US
#leveragedloan
asset class is largest ever, topping 2.9% loss in Oct. 2008. YTD: -7.76%
#Covid_19
0
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Lower-rated deals (and covenant-lite transactions) are driving the loan market right now: (free)
2
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Nearly three out of every four US leveraged loans are 'covenant-lite' (that's a new record)
5
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Huge retail retreat from risk as US
#highyield
funds see $5.1B withdrawal (largest since 2/18, when market thought Fed might raise rates due to inflation); $2.3B redemption from US
#leveragedloan
funds (most since 1/2/19) $HYG $JNK $BKLN
1
23
41
A 3.65% loss for US
#leveragedloan
asset class today. That would be a record, if not for 3.74% slide yesterday. YTD: -17.9% $
1
31
38
Recent-vintage
#leveragedloan
defaults are indeed seeing lower recovery levels, as market bears had suggested, what with the prominence of cov-lite and other borrower-friendly deal structures during recent credit cycle
#highyield
0
20
39
Another huge drop in US
#leveragedloan
returns yesterday (0.47%), contrary to surge in equities. YTD the loan asset class is down more than 2% (again, most of that decline is from this month). Triple-C debt continues to outperform, somewhat.
2
15
38
Downgrade: Twitter, from BB+ to B-. S&P notes Twitter's leverage will spike due to acquisition and that advertising revenue is exposed to slowing economic environment and "modifications in content moderation"
#highyield
#leveragedloan
2
7
39
Lots of cov-light and EBITDA adjustment talk in US
#leveragedloan
mart but also of note is ever-shrinking debt cushion. A record 35% of loan issuers last year did so sans sub debt, helping bring debt cushion of all outstanding loans down to 20%. It was 29% in 2007.
0
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S&P analysis: "When The Cycle Turns: The Continued Attack Of The EBITDA Add-Back" in front of paywall now. Check it out
#leveragedloan
#highyield
0
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This year, covenant-lite loan issuance has exceeded high-yield activity by 41%, illustrating just how pervasive cov-lite has become: (free)
1
34
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The ever-expanding U.S.
#leveragedloan
universe has stopped expanding. In fact, it shrank by $10B in July, the biggest drop in 10 years. Institutional outstandings (loans sold to CLOs/other non-bank investors) now = $1.19T
1
23
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That's 223 corporate defaults globally YTD, led by US entities (143) and Oil & Gas concerns (50 worldwide, 35 in US). "If debt grows faster and income recovers more slowly than we expect, the surge in leverage would be harder to manage," says S&P Global
1
13
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Maturities in $1.2T US
#leveragedloan
market are relatively light until 2024, when some $264B of term debt will come due (unless it's refinanced, of course). Full analysis:
0
9
34
How deep are U.S.
#leveragedloan
issuers having to dig to complete credits in a market that remains wary of risk? Very. Yields on single-B rated new-issue loans now top 10%, more than double what they were one year ago
#highyield
1
17
35
As investors/CLOs worry about downgrades, 58% of the $1.2 trillion in outstanding US
#leveragedloan
debt is now rated single-B or lower. That's the most ever. And over past 2 years the share rated B-minus has doubled, to 14.75% (another record)
0
26
37
A Chapter 11 filing by McDermott Int'l sends US
#leveragedloan
default rate to 15-month high of 1.64% (from 1.39%). With $3.6B of sec'd debt outstanding McDermott is largest bankruptcy in loan mart since iHeart in 2018
2
12
36
More from LCD's 'Weakest Links' analysis: With help of recent credit downgrades, the share of $1.2T US
#leveragedloan
market with riskier, B-minus issuer rating soared in March, to record levels (triple-C debt spiked, too)
0
8
37
A new record: 79.6% of the $1.8 trillion in US
#leveragedloan
outstandings is cov-lite. That's about $940B. The bulk of that ls riskier debt, from issuers rated B and B-
5
26
36
With seven US
#leveragedloan
defaults in May (so far), that's nearly $10B in defaulted debt, the most for a month since TXU/Energy Future Holdings' massive $20B event in 2014
0
13
35
With LIBOR rising, cos. with lots of floating-rate debt lag behind broader stock market
#leveragedloan
0
33
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US corporate debt now totals close to 50% of GDP, per the Fed and Commerce Dept. That's a record.
@WSJ
@RachelEnsignWSJ
2
27
33
With four defaults in January, US
#leveragedloan
default rate is now 1.83%. That's the highest it's been in 15 months. Again, the historical average is 2.9%, so ...
1
19
33
US
#leveragedloan
default rate increases to 1.48% in November, highest it's been in 9 mos. Though - altogether now - it's still well below the historical average (2.9%)
2
14
33
Still riding
#Fed
tailwind, US
#highyield
bond market just wrapped its busiest May ever (and busiest month since 2013): $43.8B of issuance. YTD that's $153B, a tidy 48% increase from 2019 pace
@JakemaLewis
2
15
33
Commodities default rate, from S&P Global's 2Q European Corporate Credit Outlook
0
33
33
August is usually a sleepy month for the US
#highyield
bond market. Usually ...
@JakemaLewis
0
13
31
A grim 2Q US
#leveragedloan
market, in 6 Charts:
1) Worries over inflation, war in Ukraine has many investors fleeing risk, driving loan trading prices to lowest levels in nearly 2 years …
3
10
31
US
#leveragedloan
default rate increases to 1.48% in November, highest it's been in 9 mos. Though - altogether now - it's still well below the historical average (2.9%)
1
15
31
Retail investors withdraw $3.53B from US
#leveragedloan
funds. That's yet another record, and helps wipe out gains seen throughout the year (the final 2018 number: a $3.1B net outflow)
0
19
30
There were 44 Potential Fallen Angels in January, per S&P Global Ratings. There are record 126 today. No surprise: The bulk of these entail "sectors most exposed to COVID-19-related social distancing measures." And oil & gas. $
0
17
31
What with private credit cutting an increasingly wide swath in the US
#leveragedloan
space, the share of non-syndicated credits in BDC portfolios is surging. Most private credits are unrated, as opposed to broadly syndicated deals.
1
12
28
2
20
30
The share of US LBOs leveraged at 6x - a magic number, per the Fed -
just hit its highest level since the financial crisis
0
25
30
The 4Q US
#leveragedloan
market, in six charts ...
What was a frigid 3Q syndicated loan segment thawed enough to allow some opportunistic activity (refinancings in this case. Dividends still weren't a thing in 4Q) ...
1/6
2
3
30
An eye-popping aspect of the recent US
#leveragedloan
market: New deals clearing market are doing so at serious discounts, sending borrowers' all-in rates soaring. Single-B new issues priced at an average of 92.75 in July, after plunging from 99.5 in January
0
9
28
Leveraged loans backing LBOs dried up in 3Q as investor appetite for risk disappeared. Indeed, the cost of LBO financing skyrocketed in terms of interest rates (
#leveragedloans
are floating rate) and re deep discounts on the debt. Much more:
@PitchBook
1
10
28
The Distress Level - the share of $1.2T in outstanding US
#leveragedloan
debt priced at less than 80 cents on dollar - has decreased to 20%, from high of 57% on March 23 $
0
24
29
Here's the full analysis:
#leveragedloan
downgrades are mounting, and CLOs are keeping a watchful eye, as they are limited in how much triple-C paper they can hold
@apark_
1
16
28
The 3Q US
#leveragedloan
market, in six charts …
In a risk-off market it was a new-issue desert, with volume plummeting, borrowing costs soaring and terms tightening
1/6
1
8
30
The default rate among private credits continues to tick higher, reaching 4.5% in Q1, from 4.2% a quarter previous, says Lincoln. Defaulting most frequently: businesses in the Consumer segment
#leveragedloan
1
12
29
So. Over the past 7 days, the US
#leveragedloan
market is down 1.1%. That's the steepest one-week drop since 2011 (per the S&P/LSTA Leveraged Loan Index)
3
19
28
Relax . . . CLOs are nothing like as menacing as CDOs
@FT
@BondHack
#leveragedloan
... And for the record, we're at €27.8B of European issuance YTD, the most ever, per LCD
1
7
30
The
#highyield
segment of US leveraged finance market continues to see momentum, with investors pouring record $7.7B into funds/ETFs last week. YTD: +$238M $HYG
1
21
29
One thing about the Fed's Main Street lending programs: Many issuers comprising the $1.2T US
#leveragedloan
market carry too much debt to qualify for it
1
17
29
Cov-Lite Deals Account for Record High 85% of Single-B Issuance YTD: (free)
0
27
27
Yesterday's 2.73% slide in US
#leveragedloan
market was epic indeed, far outpacing any loss since Financial Crisis, including during US sovereign debt downgrade/debt ceiling days
#COVID
ー19
0
23
28
The $2.53B withdrawal from US
#leveragedloan
funds this week? The largest on record. YTD: +$3.7B
2
30
28
For the record: The covenant-lite share of the $1.193 trillion US
#leveragedloan
market hit 80.8% in January, the most ever.
0
15
29
The share of triple-C debt in $1.18T US
#leveragedloan
mart now stands at 7.34%, the most since May 2017. This is of key interest to CLO investor base, which historically has had limited capacity for CCC risk
0
16
29
The US
#leveragedloan
default rate crept to 1.75% in July after Juice Plus and its lenders agreed to scrap principal amortization payments for 1 year and fruit grower Prima Wawona skipped interest payments. Over the past 12 months there has been $24.7B in loan defaults
@kakourisr
1
7
28
How hard has pandemic hit US
#leveragedloan
market? Through May roughly 1/3 of $1.2T in outstandings have been downgraded. That means lots, lots more triple-C debt. Full analysis:
@Kakourisr
0
11
28
Retail investors pull $4.2B from US
#highyield
funds this week. Biggest redemption since Oct. 2018. YTD: $1.9B net withdrawal $HYG $JNK
#COVID2019
0
13
28
Covenant-lite issuance in US leveraged loan market hits (another) record high in 3Q 2017
0
19
28
Btw, the amount of outstanding US
#leveragedloan
paper rated triple-C topped $100B in April, thanks in large part to a torrent of credit downgrades. CLOs, of course, have limits on how much CCC debt they want to hold
#Covid_19
0
18
26
Triple-B debt - the lowest rung of investment grade - now totals some $3T.2, more than 2.5x size of entire speculative-grade market, says S&P GFIR ($)
1
22
26
Lots of attn on plunging US
#leveragedloan
market now, so some context (some will see these numbers as problem, others as opportunity) -
Per the S&P/LSTA Index
-Share of issues priced at 80 or lower (a common measure of 'distress') is ~2.27%
2
15
24
Triple-B issuers - which are loading up on debt - make up nearly half the investment grade bond market
0
25
27
The distress level in US
#leveragedloan
market is easing. It's still elevated, but way down from 54% only two weeks ago $ Distress = loans priced at less than 80, per S&P/LSTA Loan Index
@Kakourisr
0
13
26
Another month, another record-high amount of covenant-lite loans in US leveraged market
2
21
25
For the record: The covenant-lite share of the $1.2T US
#leveragedloan
market is holding at 79%. That's about $950B
1
19
26
That's 133 global corporate defaults so far in 2016. There were 113 in all of 2015 (free)
0
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25