2021 was a record-setting year in the leveraged finance markets as continued low interest rates, robust market liquidity, and a rebound in investor demand supported a broad-based recovery in loan volumes
- New-issue leveraged loan volume reached $789.0 billion in 2021, a staggering increase over 2020 loan volume of $395.0 billion
- Annual institutional new-issue loan volume witnessed all-time highs in ‘B’-rated, dividend recapitalizations, and M&A categories
- Of note, annual M&A loan volume increased to $404.2 billion in 2021 from $183.8 billion in 2020, aided by a continued era of low interest rates and robust deal activity, particularly by sponsored companies
- Dividend recapitalizations reached an all-time high of $82.2 billion in 2021, more than double its 2020 volume, with sponsors accounting for 85% of recap volume
New Issue Leveraged Loan Volume ($bn)
Source: LCD_Quarterly_2021_Q4: Volume: New-Issue US M&A Quarterly Loans, Pg 187, 189
New Issue US M&A Loans ($bn)
Source: LCD Quarterly Q4, 2021: Volume: Quarterly US Dollar Denominated New-Issue Global Leveraged Loans. Pg 173,174
Asset-based loan (“ABL”) volume sets an all-time high record in 2021
Annual Syndicated Loan Volume ($bn)
Source: Refinitiv LPC’s Asset Based Lending Stats FY 2021, Pg 2
- ABL volume in 2021 totaled $140.0 billion, exceeding the previous high recorded in 2011 by 39%. Q4-2021 volume is also the second highest quarterly total behind Q3-2021 at $36.0 billion
- Driving overall ABL activity was refinance volume, which reached a record level of $106.0 billion in 2021 as issuers sought to cut costs and lower rates from the highs seen earlier in the pandemic
Growing concerns about inflation and communication from the Federal Reserve of its intention to raise rates in 2022 slowed issuance in the fixed rate high-yield market towards the end of 2021
High Yield Bond Volume ($bn)
Source: LCD Interactive High Yield Report, Monthly & Quarterly Volume tab
- High-yield debt issuance for the last quarter dwindled to $10.0 billion, down more than 65% sequentially as well as year-over-year. However, full year 2021 high-yield bond issuance broke all previous records to reach $465.0 billion
- Driving high-yield bond issuance was robust M&A activity, which reached a record high of $108.0 billion in 2021, more than doubling from the levels seen in 2020
Footnotes
Source: Standard & Poor | Leveraged Commentary & Data, Refinitiv, Wall Street Research, Federal Reserve.
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