Secondary Trading Volumes Surge 22% in October

November 29, 2018 - Last month we reported that one of the possible reasons that trading volumes have not grown this year alongside outstandings has been a general lack of price volatility in the secondary market.  That trend reversed in October as volatility spiked across the capital markets.  In loan land, bid levels in the secondary fell by almost 50 basis points, resulting in secondary trading volumes surging 22% in October – to $65.8 billion.  Volumes now total a record $670 billion over the last twelve months; 5% higher than the same period last year. 

Back to October, which represented the second busiest month in the secondary since March 2017 (the previous high was back in June at $66.4 billion).  As volumes ran higher and prices grinded lower, the number of loan facilities that traded in October hit a fresh record of 1,578 – roughly 100 loans (7%) higher than the average monthly total over the previous 12 months.  Interestingly, par-plus trade concentration increased two percentage points to a 45% market share in October, while loans trading north of 98 cents on the dollar surged six percentage points to an 85% market share of total volume.  Clearly, accounts that were active in October chose to trade out of the higher priced/lower yielding side of the secondary where market value gains were presumably already on the books.  And that trade looks to be a good one given that the average bid on the S&P/LSTA Leveraged Loan Index is lower by 127 basis points so far in November.

LSTA Full and Associate Members can access the full Summary, including charts, here.  For more information, please contact Ted Basta.

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