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Earnings Growth For Leveraged Loan Issuers Hits Lowest Point Since Recession

earnings growth - leveraged loan issuers

In the first quarter, EBITDA growth among S&P/LSTA Index issuers that file publicly dropped to a post-recession low of 5.9%, year-over-year, from 10.2% during the final three months of 2014 and 7.1% during the comparable period last year, according to data from S&P Capital IQ.

The slowdown was a result of three trends, participants say.

  • First, America’s economy cooled significantly in the first quarter. GDP inched up 0.2% – the slowest pace in a year and down from 2.2% in the fourth quarter – according to the Bureau of Commerce’s preliminary estimate. What’s more, some economists calculate the final reading is likely to be slightly negative when the larger-than-expected trade deficit is taken into account.
  • Second, a stronger dollar was a headwind to earnings in the first quarter.
  • Finally, the beleaguered energy sector subtracted roughly 0.4 percentage points from the overall EBITDA gain of S&P/LSTA Index issuers in the first quarter. For the record, Oil & Gas issuers in the S&P/LSTA Index posted a 2% year-over-year decline in EBITDA during the first quarter. Ex-energy, EBITDA across the Index climbed 6.2% during the opening three months of 2015.

This analysis is part of a longer story, available to LCD News subscribers here.

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