KPMG Corporate Finance LLP Capital Advisory's 3Q 2014 Credit Markets Quarterly provides a snapshot of credit market activity July through September 2014, including a general overview, trends, pricing, and structures. Key insights include:
- New-issue leveraged loan market activity slowed in the third quarter as an increase in M&A-related volume was offset by slower opportunistic deal flow amid continued net outflows in both high yield bond funds and loan mutual funds
- New-issue leveraged loan volume totaled $132 billion between July and September, including $93 billion of institutional tranches as compared to $157.7 billion/$113.1 billion in the second quarter.
- Year-to-date volume stands at $460 billion/$334.6 billion institutional, down from $480.2 billion/$366.3 billion during the comparable period last year.
- The market for opportunistic deals softened as retail investors pulled an estimated $9.4 billion from loan mutual funds in the biggest quarterly redemption since 2001. That left the higher-cost CLO market to fill the void amid the pullback.
- With issuers putting refinancing and recap activity on the sidelines, M&A deal flow represented more than half of all quarterly volume and pushed to a post-Lehman-bankruptcy high of $79.2 billion.
- With issuers still benefiting from no shortage of market liquidity, covenant-lite loan volume reached $212.6 billion during the first three quarters of 2014 which represents 46% of all new-issuance leveraged loans.