September 26, 2018 - Following a seasonally light July when volumes dipped to an eight month low, U.S. secondary loan trading volume rebounded 10% in August to $56.5 billion.  Secondary trading volumes have totaled $455 billion through August, 5% higher than the same time last year.  Furthermore, when annualized, this year’s volume figure would spike to a fresh record of $683 billion, $48 billion higher than 2017’s record of $635 billion.  And full-year 2018 volumes might even run higher than the annualized figure given how much outstandings have grown since the end of April.

Over the past four months, S&P/LSTA Leveraged Loan Index Outstandings increased by more than $80 billion while the number of issuers and facilities in the index increased by 58 and 77, respectively.  With more loans to trade, secondary trading has become much more active during the second half of this year.  To that point, monthly trading volumes averaged $54 billion during the first four months of 2018 compared to $60 billion since. At the same time, the number of loan facilities trading on a monthly basis has averaged 1,510 since May as compared to the average of 1,460 loans trading during each of the first four months of 2018.  In comparison, an average of 1,400 loans traded each month in 2017.

While secondary trade activity rebounded in August, prices softened a bit after rallying in July.   Trade levels fell by an average of 10 basis points, to a 98.33 handle. In contrast, the median trade price was unchanged at 100 for the third month running. (In fact, the median trade price has lingered at par or better for the past two years). In turn, August’s advancer/decliner ratio failed to illustrate any conviction.  All told, 41% of loan prices advanced while 38% declined.  August’s advancer/decliner ratio of nearly 1.1:1 was a far cry from July’s six-month best 3:1 ratio.

For more information, please contact Ted Basta.