United States

KPMG Capital Advisory Q2 2014 Credit Markets Update

Jul 28, 2014
From the Global Enterprise Institute and the Advisory Institute

KPMG's Capital Advisory Q2 2014 Credit Markets Quarterly Update provides a snapshot of credit market activity, including a general overview, trends, pricing and structures.

Key insights from the Q2 newsletter include:

  • The leveraged loan market slowed slightly during the second quarter amid relatively lower refinancing activity. Q2 2014 volume reached $152.9 billion, a 9.4 percent decrease from Q1 2014 volume of $169 billion.

‒ A robust M&A pipeline and attractive financing terms for LBOs lifted M&A volumes, which replaced much of the slower refinancing activity in the second quarter.

‒ M&A volume totaled $132.9 billion, the largest six-month figure of the post-credit-crunch era – up from $115.0 billion during the second half of 2013 and $80.5 billion during the year-ago period.

‒ Sponsors, taking advantage of loan market liquidity to reload deleveraged issuers, again dominated the recap game.

  • Second lien/junior-claim loans remained hot during the second quarter, with $12.5 billion of new-issue volume.

‒ The slightly less robust tone of the second quarter barely slowed covenant-lite momentum. The share of new institutional loans structures with incurrence-only tests inched to a one-year low of 59.7 percent, after ranging from 63.0 percent-66.0 percent during the prior three quarters.

  • The investor demand for leveraged loans was stable and strong during the second quarter.

‒ Record-setting CLO issuance (ii) a shift in retail inflows from positive to negative and (iii) an aggressive regulatory landscape.

For further details, read KPMG Capital Advisory Q2 2014 Credit Markets Update.

Contact KPMG
Philip Isom
Head of U.S. Corporate Finance