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
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Source: Standard & Poor | Leveraged Commentary & Data.
Note: Middle market refers to companies with EBITDA of $50 million or less.