All is well that ended well in the fourth quarter. Following its worst monthly print this year (-0.45% in October) the S&P/LSTA Leveraged Loan Index (LLI) produced a risk-on driven 0.6% November return and an eight-month best 1.1% return in December.
The attached spreadsheet is for December 2019
December has been a strong month in the secondary loan market so far, with the S&P/LSTA Leveraged Loan Index (LLI) already returning over 1%. With less than two weeks remaining before year-end, loans have already delivered an 8-plus% annual return, marking a three-year high.
Last month in this space we boldly wrote “there is a silver lining for loans: they appear to be oversold”. And sure enough, following its worst monthly print this year (-0.45% in October) the S&P/LSTA Leveraged Loan Index (LLI) produced a four-month best 0.6% November return.
The attached spreadsheet is for November 2019
November was a solid month in the secondary loan market, with S&P/LSTA Leveraged Loan Index (LLI) returning 0.59%. October, however, was a different story. Secondary loan trading volume spiked 19% in October to a six-month high of $64 billion. This followed a two-month stretch where volumes fell below $60 billion per month.
For the second time in three months, loan returns were negative in the loan market. After returning 0.47% in September, the S&P/LSTA Leveraged Loan Index (LLI) produced a 0.43% loss in October –the worst monthly print this year.
The attached spreadsheet is for October 2019
This presentation is the for Third Quarter 2019 LSTA Secondary Trading & Settlement Study.
After recording a record high during the first quarter of this year ($212 billion), secondary loan trading volumes have steadily declined. Following second quarter’s 10% drop, third quarter activity fell an additional 14% to $165 billion. Third quarter’s tally was just 2% higher year-over-year.
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