The Return of the Leveraged Loan Market

Increased confidence and appetite for risk developed in 2013 and has continued at pace into Q1 2014. 2013 brought us the highest annual new-issue loan volume in five years. This translated to an impressive year-on-year increase of 136% according to LCD S&P Capital IQ, cementing 2013 as the year of the return of the leveraged loan product. As the run of momentum continues, 2014 is so far not proving a disappointment. With €26.3 billion of leveraged loans issued in the first four months of 2014 alone, the heated market, intensified by an increasingly liquid investor base, has allowed borrower-friendly structures and pre-crunch aggressive deal terms to appear firmly back in focus. This article takes a look at some of the loan trends dominating the market so far this year.

Yankee Loans -

Between 2011 and 2012 when European bank lending stalled in the face of macroeconomic concerns and looming regulatory constraints, European borrowers began looking to the US market in order to find readily available sources of refinancing liquidity. Over the years, the volume of European borrowers accessing the dollar market has more than doubled; this growth in volume also reflects the broader category of borrowers that have been able to attract financing from US investors. Continuing from last year’s trend, so-called Yankee Loans remain a focal point of this year. In the first quarter, €14.7 billion was syndicated into the US by European borrowers representing a 37% increase from the comparable period in 2013.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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