Overall, Europe saw leveraged loan yields rise during the third quarter. At the same time pricing in the U.S. has also risen, in response to mutual fund outflows. Appetite for leveraged loans continues to be technically sound in Europe, though the pipeline for loan issuance is not too encouraging. The question at this point in the year is whether the supply of new deals will be so scarce in the coming weeks, and appetite so great, as to cause investors to lose some of the discipline they displayed in the third quarter. The alternative possibility for the fourth quarter is that supply is sufficient to keep pricing elevated and to allow buyers to keep pushing back on weaker credits, forcing sponsors to be cautious about bringing opportunistic recaps or repricings to the market.
Slideshare download available here.