
Weekly Notables
While investors have largely been focused on tariffs. there has been a slight improvement in the market recently. The loan market experienced a firmer tone this week. CLO demand continues to provide strong support, helping to mitigate some of the macro-driven weakness. For the seven-day period ended March 27, the Morningstar® LSTA® US Leveraged Loan Index (Index) returned 0.21%. The average Index bid price gained 6 bp, closing out the week at 96.51.
Activity in the primary market was relatively light compared to last week, with total institutional volume reaching $6.7 billion. The volume was mainly driven by M&A, which accounted for about $3.5 billion, and LBOs, which contributed $1.6 billion. Repricing activity saw a modest increase, rising to $1.5 billion this week from $0.3 billion the previous week. In the forward calendar, net of the anticipated $16.1 billion of repayments not associated with the forward pipeline, the amount of new supply projected to enter the market was $14.6 billion, down from $18.9 billion in the prior weekly estimate.
In the secondary market, trading levels moved higher across all rating credits. For the week, Double-Bs and Single-Bs posted positive returns of 0.19% and 0.25%, respectively. On the other hand, CCCs remained in the negative territory at -0.07%.
CLO formation continued at a healthy pace, with nine deals priced during the week, pushing the YTD volume to $47.45 billion. In the retail space, investors withdrew $269 million from loan funds this week. Since the beginning of March, approximately $4.36 billion has exited the funds, marking a sharp reduction from the $6.3 billion in cumulative inflows during January and February. This brings the YTD total inflow to $1.94 billion.
There were no defaults in the Index this week.
Source: Pitchbook Data, Inc./LCD, Morningstar ® LSTA ® 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).