KPMG Corporate Finance LLC Capital Advisory's Q1 2015 Credit Markets Quarterly provides a snapshot of credit market activity January - March 2015, including a general overview, trends, pricing and structures.
Key insights from the Q1 newsletter include:
- Leveraged loan volume rebounded during the first quarter of 2015, bolstered by large, well-rated, M&A loans.
- New-issue volume rose in the first quarter of 2015 to $86.1 billion from a three-year low of $66.6 billion over the previous quarter.
- Although volume was up sequentially in the first quarter of 2015, the primary market paled in comparison to the first quarter of 2014, when arrangers placed $168 billion of new issues, including $129 billion of institutional tranches. This was amid the liquidity heavy, regulation-light first quarter of 2014.
- Refinancing activity remained lukewarm in the first quarter of 2015. Issuers executed only $20.4 billion of loan-for-loan refis versus $17.9 billion in the fourth quarter of 2014 and $64.7 billion during the first quarter of 2014.
- Average yields decreased in the first quarter as higher priced CLO volume fell slightly off and loan mutual funds outflows subsided: – BB/BB-loans decreased slightly (currently at 4.20 percent from 4.28 percent in the fourth quarter) and B+/B loans decreased (currently at 5.87 percent from 6.51 percent in the third quarter).
- The credit quality of the new-issue market improved markedly in the first quarter of 2015 due to:
- regulatory pressure on arrangers to tap down deal leverage, and jumbo executions from well-rated corporate issuers.
- Furthermore, the weak technical conditions of the fourth quarter and early 2015 discouraged lower-rated issuers from bringing deals to market.