In particular, the revival of the new-issue CLO market buoyed demand for seasoned paper.
In other words, you have to agree that the new-issue market has more than its share of hazards.
Certainly, the forward calendar implies that new-issue volume will continue apace once the market gets back to business.
Since the start of 2005 virgin companies have accounted for 59% of the new-issue business, retreads of leveraged buyouts the remainder.
That drove new-issue clearing yields down to their lowest level since April.
Turning from the secondary to the primary, this graph details new-issue volume for both leveraged loans and high-yield bonds.
FORBES: November 2012, European Leveraged Loan Market Analysis
Strong IPO pricing comes as more professional money managers are willing to dip their toes into the new-issue pool.
Spitzer assured him that the Merrill fine was just the beginning and spoke of his plans to investigate new-issue allocations.
Looking beyond Labor Day, LBO-driven loan volume is set to rise as the recent pickup in auction activity generates new-issue paper.
FORBES: Leveraged loans return 1.16% in July, trailing other asset clases; 5.75% YTD
But this is the era of vast new-issue wealth, and Babson did not want to alienate a hot prospect like DeMello.
Flex activity, therefore, favored issuers over investors by a 2:1 ratio in July, pushing down new-issue clearing yields across the board.
FORBES: Leveraged loans return 1.16% in July, trailing other asset clases; 5.75% YTD
This graph details new-issue volume for both leveraged loans and high-yield bonds.
Further out, LBO-driven loan volume is set to rise after Labor Day as the recent pickup in auction activity generates new-issue paper.
FORBES: Leveraged loan technicals strengthen in July as supply shrinks
In all, 43.2% of sponsored-backed new-issue volume since Oct. 1 is covenant-lite.
Thank rebounding stock markets in Asia and Latin America, the new-issue technology boom in the U.S. and pockets of prosperity in Europe.
Along with a better-than-expected macro environment in August, surplus inflows to the loan market lifted secondary prices and pressured new-issue clearing yields lower.
Of course, that assumes that macro events do not intrude again, driving investors to the sidelines and keeping new-issue loan volume at bay.
Supply sagged in August even though issuers took advantage of the strong market tone to keep the new-issue spigot open deep into the month.
In November, secondary prices inched lower as accounts turned their gaze to the bulging new-issue calendar and as concerns arose regarding the fiscal cliff.
FORBES: Leveraged loans return 0.31% in November; YTD return is 8.8%
With the scale heavily weighted to demand, it was not for nothing that new-issue clearing yields fell significantly in January, reaching new credit-crunch lows.
Managers generally expect a decent amount to close in February but without a significant increase in new-issue supply volume could downshift considerably by March.
The biggest factor here was the ongoing dearth of new-issue supply.
FORBES: S&P/LSTA Index Loan Index Hits All-Time High With A 2.18% Gain In Jan.
And where the best corporate bonds once yielded less than a percentage point above Treasuries, new-issue spreads have now widened to almost three percentage points.
ECONOMIST: Signs of a crunch in America's markets for credit
The growing supply of paper in the offing has enabled managers to take a more selective stance toward new syndications and, hence, demand wider new-issue premiums.
FORBES: May 2012, US Leveraged Loan Market Trends and Analysis
The same factors are at work in the new-issue market, where, in late June, clearing yields narrowed and flex activity shifted sharply in favor of issuers.
For one thing, beyond the immediate calendar, participants say that front-end activity for new LBOs has waned, suggesting that new-issue supply may be headed lower in April.
Breaks into the secondary were not as robust as in June and July, but that can partly be chalked up to compressing new-issue premiums and tighter clearing levels.
Likewise, new-issue clearing yields narrowed significantly during the third quarter.
In the new-issue market, the story was similar.
FORBES: March 2012, US Leveraged Loan Market Trends and Analysis
The pattern was also clear in the new-issue market where single B clearing yields gapped out 13 bps versus those of BB loans, which remain in high demand not just from institutional loan accounts but banks and cross-over investors.
FORBES: Leveraged loans return 0.31% in November; YTD return is 8.8%
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