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LSTA Newsletter: September 13, 2019

This week, we start off pondering the August secondary slump (but console ourselves with the YTD 6.5% return).  We then turn to CLOs by: 1) analyzing their ownership and runnability and 2) defending them in the press. And what’s a week without LIBOR? We end with the latest (accounting) hurdle to LIBOR transition being knocked […]

LSTA Newsletter: May 3, 2019

This week we cover Trading Records; Loans as Securities?; LIBOR Progress; Systemic Risk & AAL Good Things

April Secondary Market Monthly: It’s Lonely at the Top…of the Cap. Structure

As volatility dissipated in April (the VIX fell six points) and equities and HY bonds traded modestly higher, the loan market churned out its fifth consecutive month of positive returns.  The S&P/LSTA Leveraged Loan Index (LLI) returned a three-month-best 0.41% in April, a level which only trailed high yield bonds’ 0.68% return.  At a 1.8% return on the year, loans not only continued to lead the other major asset classes (from treasuries to equities), they remained the only investment that actually delivered a positive return through April.  That said, market value (MV) returns in the loan market were negative for the third month running, albeit just barely at -0.02%. (In fact, MV returns have been positive just once since November).  That should not be surprising given that two-thirds of the market has been trading above par in the secondary this year.

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