A primer brought to you by S & P Global that dissects all aspects of syndicated loans.

Syndicated Loans: The Market and the Mechanics, a primer created for the Loan Market participant.

The U.S. senior secured institutional term loan asset class provides a number of benefits to investors, including a floating-rate coupon, a large and liquid market, lower credit and interest-rate risk than high-yield bonds, and many ways to gain exposure.

Investors in loans like their short duration, high position in the capital structure and their floating-rate attribute that has resulted in better returns than other fixed income instruments. LSTA Executive Director Bram Smith met with four leading loan market participants to discuss the current state of the market, the issues it faces, and how senior loans can enhance institutional portfolios.

April ended with a flurry of activity in the secondary loan market as traders finally sold into the relief rally that began in mid-March.  Despite a late month bearish tone, the S&P/LSTA Leveraged Loan Index (LLI) still churned out a positive 0.22% return in April – a three month best.

Following January’s flurry of secondary trading activity in the loan market (volumes spiked 48% to $76B), February volume increased another 3% to $78.1B. While this marked the second busiest month on record, February 2022 still fell well short of March 2020’s all-time high of $119B.

Over the past three decades, the senior loan market has grown  from relatively modest beginnings into an essential element of corporate finance, playing a core-plus role in institutional fixed-income allocations.  In 2018, the S&P/LSTA Leveraged Loan Index, an indicator of market size, surpassed $1 trillion in outstandings.

The LSTA presents the results of the first quarter Secondary Trading & Settlement Study and discuss key trends and analysis that will shape the direction of the market in 2022. Presented by Ted Basta, EVP of Market Analytics and Investor Strategy of the LSTA.