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KPMG Capital Advisory Q2 2013 Credit Markets Update

Jul 17, 2013
From the Advisory Institute and the Global Enterprise Institute

KPMG's Capital Advisory Q2 2013 Credit Markets Quarterly Update provides a snapshot of credit market activity April through June 2013, including a general overview, trends, pricing and structures.

Key insights from the Q2 newsletter include:

  • Leveraged loan volume totaled $163 billion as compared to an all-time high of $189 billion in the first quarter. For the first half, volume ($352 billion) was up 74 percent year-over-year – second to $373 billion for the first half of 2007.
  • The leveraged loan market was up through May with issuers taking advantage of continued liquidity and the lack of M&A/new money deals.
  • Momentum shifted to arrangers in mid-June after the Federal Reserve indicated a tapering to its bond-buying program in the latter half of the year.
    • With the prospect for higher rates looming, managers started to focus on extracting wider yields prompting lenders to push back on aggressive structures and repricings.
    • Flex activity swung in the direction of the investor in June by a score of 36 to 8 – with about 20 other deals completely pulled from the market. In stark contrast, issuers won the flex match 228 to 48 during the first five months of the year.
  • However, loan market activity continues to remain strong driven by high liquidity and the overall supply-demand imbalance that still exists in the market.
  • In recent news post quarter end, the Fed changed course a bit by announcing that the economy still needs highly accommodative monetary policy for the foreseeable future and reiterated the short-term interest rates won’t raise until the unemployment rate reaches 6.5% (currently 7.6%). The news sent stocks soaring and it will be interesting to monitor how the credit markets react.


For further detail, read KPMG Capital Advisory Q2 2013 Credit Markets Update.