May 20, 2015, New York, NY – In observance of Memorial Day, the Loan Syndications and Trading Association (LSTA) recommends treating Monday, May 30 as a loan market holiday for purposes of calculating delayed compensation under the LSTA standard forms of trade confirmation.
Two months do in fact make a trend. Since bottoming out in late February, trade price levels (and volumes) have staged a dramatic turn-around in the secondary loan market.
The two month rally in secondary loan prices has been “HUUGE”; loan returns have been made great again. Since falling to more than a four-year low of 89.25, LSTA/Thompson Reuters LPC Mark-to-Market (MTM) average bid levels have advanced 372 bps in the secondary.
Looking back to the first quarter, secondary trading volumes totaled $146.5 billion, a quarter-over-quarter increase of 3%. Trade activity though, didn't heat up until March, when volumes soared 24% to a 13-month high of $55.8 billion.
Back on February 25th, the secondary loan market finally caught a bid after LSTA/LPC Mark-to-Market (MTM) prices on the S&P/LSTA Leveraged Loan Index (LLI) had tumbled 200 basis points since year-end 2015. At that point, the LLI was in the red for 1.51% on the year. But during the next five weeks, through month-end March, loan prices rallied 225 basis points (alongside stronger equity, HY bond and commodity markets).