Insight

Credit Markets Update Q2 2021

Read more about the credit markets activity during Q2 2021

Mike Rudolph

Mike Rudolph

Managing Director, KPMG Corporate Finance LLC

+1 312-665-1442

Leveraged loan issuance continued to show strength during the second quarter of 2021 amid the re-opening of the economy and as investors flocked to the floating rate asset class amid the specter of inflation

  • New issue leveraged loan volume recorded $189 billion during Q2-2021, a decline of 16% compared with the previous quarter, but a significant increase from the same quarter last year
  • M&A loan volume reached $104 billion during Q2-2021, one of the largest quarterly totals on record driven by a low interest rate environment and strong deal market
  • Refinancing volume declined during Q2-2021 as issuers pushed out near term maturities and reduced pricing during the previous quarter
  • Default rates continue to decline as liquidity in the debt markets has resulted in fewer restructurings than initially anticipated

New issue leveraged loan volume quarterly ($bn)

New issue US M&A loans - quarterly ($bn)


High yield bond issuance continues to set records amid a continual decline in interest rates and issuers seeking to lock in fixed rate debt with the prospect of inflation looming

  • High-yield debt issuance has totaled $286 billion in first six months of 2021, up 36% from the record of $210 billion set during the first half of last year, supported by a continual low rate environment and extended maturities
  • Refinancing-driven high-yield bond issuance was $202 billion during the first six months of 2021, or 71% of total high-yield issuance volume for the first half of 2021
  • High-yield issuance backing M&A reached a record $36.8 billion during Q2-2021, which has contributed to increased full-year issuance forecasts
  • The average new-issue yield for high-yield bonds dropped to a record-low 5.26% in Q2-2021, more than 1.5 points lower than the rate in Q2-2020, and down from the pre-pandemic low of 5.82% in Q4-2019

High yield volume ($bn)

High yield - Average new issue yields


We hope you find this information valuable, and as always, feel free to reach out if you would like to discuss in further detail. To read the full report, download the PDF below.

Footnotes

Source: Standard & Poor | Leveraged Commentary & Data.

Note: Middle market refers to companies with EBITDA of $50 million or less.


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