Loan Market Is Freezing: Banks Fail To Sell $1.6 Billion In Loans

Saturday, December 22, 2018
By Paul Martin

by Tyler Durden
Sat, 12/22/2018

One week ago we noted that ominously the junk bond market appeared to have frozen without a single high yield bond pricing in the month of December, the first such occurrence since 2008. Yet while the bond market was on the verge of locking up especially in the lower rating tiers, we observed that the leveraged loan market was still functioning because even as prices had slumped over the past two months, banks that committed to finance highly leveraged buyouts offered loans at substantial discounts to entice investors. And, as the chart below shows, the average new issue yield by month had risen to the highest in years, with CCC-rated issuers forced to pay the most in 7 years to round up investor demand.

Even so, it was only a matter of time before the stock market contagion prompted a fearful reappraisal of the loan market, especially in light of the imminent collapse in CLO activity as a record amount of CLOs will be eligible to be reset or refinanced next month, putting even more pressure on prices…

The Rest…HERE

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