Despite the increased volatility and activity in the lower end of the market, U.S. secondary trading volumes contracted 19% in July to $46.2 billion – but one must note that June’s $55 billion in activity was the second highest monthly tally on the year.
The LSTA filed an amicus brief on August 10, 2015 requesting that the Court of Appeals, New York State's highest court, agree to hear an appeal of a case, Stonehill Capital v. Bank of the West, which presents two questions of utmost importance to the loan market.
Suffice it to say, it’s been a pretty brutal week in the markets. As of yesterday’s close, the S&P 500 had erased nearly 50% of its 2015 gains (since the end of July), while the Dow traded down to almost a six-month low.
According to the LSTA’s second quarter 2015 Secondary Trading Study, 2Q15 secondary trading volumes were down 3.5% to $153 billion. But if annualized, 2015 trading activity would total $621 billion- basically tracking last year’s record pace of $628 billion which was 21% higher thanthe market’s previous high water mark established back in 2007.
So here we are, six months into 2015 and S&P/LSTA Leveraged Loan Index (LLI) returns have bested all other major asset classes. At 2.83%, first half loan returns came in slightly ahead of the HY bond market (2.5%), more than double that of the S&P 500 (1.24%) and markedly higher than the negative returns produced by the interest rate sensitive 10-year Treasury (-0.51%) and HG bond (-0.46%) markets.