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US Leveraged Finance Market Hits Higher Gear As Issuers Take Advantage Of Hot Market

The U.S. leveraged finance market shifted into an even higher gear last week as junk bond and leveraged loan issuers continue take advantage of borrower-friendly conditions, combining for $29.4 billion in new issuance.

The loan market made the biggest splash. Roughly 30 issuers launched credits last week for a hefty $17.4 billion in volume, according to LCD, an offering of S&P Global Market Intelligence. However, while that’s an impressive number, it did little to help yield-hungry investors looking to put cash to work. US leveraged finance issuance

“In a market heavy with refinancing and repricing activity, many deals offered no new money at all,” writes Chris Donnelly, in his weekly market wrap for LCD. “Last week’s transactions produced only about $7 billion of new institutional loans.”

One of those was courtesy retailer J.C. Penney, which launched a $2 billion credit that would refinance a real estate term loan. Also last week, Ferrara Candy, maker of Chuckle’s, Brach’s, and Now & Later candies, among others, wrapped a $535 million credit that refinanced debt and funded a dividend to private equity sponsor Catterton Partners (dividends are another loan market trend picking up steam).

The high yield bond market was busy as well, racking up some $12 billion in issuance, the most in a week since November, according to LCD. The highest-profile high yield name last week was DISH, which approached the market for $750 million but ended up with a whopping $2 billion after upsizing the deal due to investor demand.

Also of note, Dell priced $3.25 billion of notes backing its acquisition of EMC. The appetite in both the leveraged loan and high yield markets comes as cash flows into each market look to stabilize. U.S. loan funds saw their third straight inflow last week, while U.S. high yield funds saw their second straight gain (a sizable $748 million), according to Lipper.

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