The U.S. leveraged loan market continued to favor issuers in September, with demand for paper topping supply by $9.1 billion, according to LCD. While that’s down from the whopping $12.1 billion imbalance in August, it’s up from a still-hefty $6.5 billion in July.
As a result of this three-month technical tilt, the September loan market was set firmly in overdrive, leading to outsized activity across many corners of the asset class, including institutional issuance (which hit a record high), high-yielding recap/dividend deals (the $6.9 billion in September was the most since July 2015), and even CLOs, a crucial leveraged loan investor constituency that has been largely dormant for much of 2016.
Why the supply/demand imbalance? Investors hungry for yield - and paper - have been pouring cash into U.S. loan funds, and CLO issuance had its busiest month of the year, as that market looks to price deals before new regulations hit at year-end. - Tim Cross
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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.