Chill In The Air
The BDC sector’s upward trend stalled again this week.
The Wells Fargo BDC Index dropped (1.3%).
Likewise, BDCS – the UBS Exchange Traded Note – saw its stock price drop (0.9%) to $20.72.
That’s the lowest level for BDCS in 5 weeks.
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Topics: Loans, Middle Market, Analytics, BDC, market analytics, business development company, Losers, Fixed Income, News, bdc reporter
The leveraged loan market last week continued to build on trends that became evident two weeks prior, with more issuers winning aggressive terms and pricing, and an environment firming for the renewal of opportunistic business.
Significantly, while last week’s gross launched volume was roughly in line with the prior week’s tally, at $11 billion, opportunistic volume accounted for $4.3 billion, all of it involving repricing. Moreover, net launched volume ebbed to just $4 billion, exacerbating fears that accounts won’t have much new paper in which to invest after the big September rush slows.
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Topics: Analytics, market analytics, Fixed Income, LevFin Insights, News
May You Live In Interesting Times
BDC Fixed Income – which most of the time is as exciting as watching paint dry – is in the midst of a dramatic period of change.
First of all – and the primary focus of our weekly Market Recaps – the prices of existing issues are dropping.
We noted as much last week, and the phenomenon continued this week.
The median price of the now 38 different public BDC issues we track dropped to $25.21, from $25.29 and $25.35 two weeks before.
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Topics: Loans, Middle Market, Analytics, BDC, market analytics, business development company, Fixed Income, News, bdc reporter
The sellside’s steady messaging that there’s a lack of a meaningful calendar behind current loan activity is resonating with investors, although LFI continues to track $38.2 billion of volume that’s still to come, including $25.5 billion of new money. The big early M&A deals, Refinitiv, AkzoNobel Specialty Chemicals and Web.com, have indeed set the tone for the market moving forward; investor appetite seems practically endless for all but the most challenging credit stories.
Hot market conditions are readily on display in last week’s flex ratio, which favored issuers by a margin of nine to one. Moreover, launched volume last week remained relatively light, reinforcing the impression of a slowdown in deal flow. Thirteen issuers launched $8.7 billion last week, for net new money of $6 billion. M&A again was the emphasis with $7 billion launching. However, last week’s string of successful executions and tight prints likely means the mix will soon shift back toward opportunistic transactions—including repricings.
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Topics: Middle Market, BDC, market analytics, business development company, LevFin Insights, News
Behaving Itself
“We’ll stick with the party line of these past few weeks and project that we still expect BDC prices to move higher in the short term.
Or, at the very least, remain in this narrow channel a little longer”.
That’s an extract from the BDC Reporter’s sentiment last week, which turned out to be a fair summary of what happened through September 21, 2018.
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Topics: Middle Market, BDC, market analytics, business development company, Fixed Income, News, bdc reporter
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