According to analysis on the loans tracked by AdvantageData, USD leveraged loan volume rated Ba3-Ba1 and B3-B1 continued its upward trajectory over the last 15 months topping out at $150.6 billion in Q1/17. This was due predominantly to first lien refinancings more than doubling in Q1/17 to $111.7 billion.
Of that $111.7 billion in refinancings in Q1/17, 83% or $92 billion originated from approximately 45 loans in excess of $1 billion with the average issue size over the quarter at $1.3 billion.
Over the same period, origination yields on refinancings decreased from 5.2% at Q2/16 to 4.4% at Q1/17 while average coupon spread dropped from 375 bps to 303 bps at Q1/17.
Eighteen companies rated Ba1 represented $35 billion of refinancings or over 31% of refinancing in Q1/17. While average coupon spreads have been dropping across the loan ratings spectrum, average refinancing coupon spread for Ba1 companies dropped from 287 basis points at q4/16 to 226 basis points at Q1/17. Origination yields correspondingly dropped from 3.88% to 3.3%.
- The Q1/17 Ba1 refinancing vintage had an average OID of 99.95 and has subsequently bid up slightly to an average mark to market of 100.54, according to Advantage Looking at the Loan Forward Calendar, this trend will continue with over $50 billion in loans being marketed with proceeds targeted to reprice or refinance existing loans.
- Of the 43 loan refinancings in the pipeline being tracked by AdvantageData, 36 are considering a 101 soft call provision for six months and only two loans include a one year non-call.
- Looking at 12 of those refinancings with institutional term loans including the likes of Western Digital, Aramark, Hilton, HCA, etc the average drop in Libor with the refinancing was 75 basis points.