United States

KPMG Capital Advisory Q1 2015 Credit Markets Update

Apr 22, 2015
From the Advisory Institute and the Global Enterprise Institute

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.