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.
November LSTA/Refinitiv Mark-to-Market Pricing File
Following two consecutive months in the red, secondary loan market prices finally caught a bid in July. As a result, the average bid level on the S&P/LSTA Leveraged Loan Index (LLI) increased 27 basis points, to 97.06. The move higher pushed the July LLI return to a three-month best of 0.8% as market value returns (0.29%) were positive for just the second time in five months. The Index had returned 6.6% through month-end July, but prices have since softened following an “insurance policy” rate cut by the Federal Reserve and an intensified trade war with China. But while the Dow plunged 760 points on Monday, loans slid just 10 basis points.
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