Primary volume in the U.S. leveraged loan market fell in the third quarter as opportunistic activity stalled amid choppy conditions. A prolonged August break due to the late Labor Day contributed to the slowdown.
New-issue volume for the third quarter was $112.3 billion, including $67 billion of institutional tranches, down from $140.2 billion/$85.3 billion in the second quarter and $133.6 billion/$92.1 billion in the third quarter last year.
U.S. leveraged loan volume in the year to date is $346 billion, including $209 billion of institutional paper, down 25% and 37%, respectively, from $461 billion/$333 billion for the first three quarters of 2014.
The read at the moment is that volume will continue in the fourth quarter at the scaled-down pace of the first nine months of the year. For one thing, leverage lending guidelines will continue to winnow LBO and recap activity.
For another, technical conditions, though still solid, are far from the levels normally associated with muscular refinancings and repricing activity. Indeed, during the waning days of September, the share of the S&P/LSTA Index bid at par or higher languished at 11.3%, down from 28.9% three months earlier.