
The loan market’s recent rally hit a pause this week, as the weighted average bid price of the Morningstar LSTA US Leveraged Loan Index (Index) slipped by three basis points (bps) to 97.55. This was largely due to heavy new-deal flow in the primary market, which resulted in some modest pressure on secondary trading levels. Still, the Index delivered a positive return of 0.11% for the seven-day period ending July 24, driven by coupon carry.
The primary market saw a notable uptick in issuance, as a total of $77.6 billion was issued this week, representing one of the busiest weeks on record for the asset class. Repricing activity was a key catalyst, representing 80% of all transaction volume. Away from repricings, the rest of the issuance primarily consisted of refinancing deals, although some M&A paper and dividend recaps were prevalent as well. Looking ahead, net of approximately $29.4 billion of anticipated repayments that aren’t associated with the forward calendar, repayments outstrip supply by roughly $13.2 billion, compared to repayments outstripping supply by $12.1 billion last week.
Trading in the secondary market remained active, and a few issuers kicked off earnings for the loan market. Across credit quality, the lower-rated parts of the market continued to outperform given healthy appetite for risk. CLO managers issued eight new deals this week, bringing the YTD tally to an impressive $117.5 billion. Retail loan funds recorded a net outflow of $108 million for the week ending July 23, according to Morningstar, ending a four-week inflow streak.
There were no defaults in the Index this week.




Source: Pitchbook Data, Inc./LCD, Morningstar LSTA US Leveraged Loan Index. Additional footnotes and disclosures on back page. Past performance is no guarantee of future results. Investors cannot invest directly in the Index. *The Index’s average nominal spread calculation includes the benefit of base rate floors (where applicable).