Credit Markets Update Q4 2022
Read more about the credit markets activity during Q4 2022
Credit Markets Update Q4 2022
Download PDFLeveraged loan volume sharply decreased in 2022 amid significantly higher borrowing costs and increased recessionary risks to the economy
- Fourth quarter new-issue leveraged loan volume reached $59.7 billion, down sharply from $171.9 billion in the fourth quarter of 2021. Full year 2022 new-issue volume reached $436.0 billion, a dramatic decline from $798.0 billion in 2021
- Liquidity in the bank market receded in 2022. Higher rate-induced market-to-market losses and deposit base uncertainty placed pressure on bank capital causing a sharp decline in syndicated loan volume
- The mood is brighter in the private credit market where direct lenders have continued to gain share amid record amounts of dry power allocated to the asset class
- Refinancing volume did make a comeback in the fourth quarter. Higher-rated issuers chipped away at near term maturities, pushing volume to $21.5 billion, the highest quarterly total in 2022.
New Issue Leveraged Loan Volume ($bn)
Count of LBOs financed in broadly syndicated vs private credit markets
Higher interest rates continue to put downward pressure on high-yield bond issuance with the last six months of 2022 period recording the lowest post-global financial crisis levels
- Fourth-quarter issuance of $15.4 billion, down 78% year-over-year, compares with $70.2 billion for the same period in 2021
- The average yield at issuance was 10.4% in the fourth quarter, the first double-digit average for any quarter since 2009
High Yield Volume ($bn)
The Federal reserve raised interest rates by 50 bps in December citing high inflation, bringing the target federal-funds rate to between 4.25%-4.5%. 2022 saw a total of seven interest rate increase from the Federal reserve
- The increase in the federal funds rate was mirrored by SOFR which has increased from 0.50% in 2021 to near 4.50% in 2022
Secured Overnight Financing Rate (SOFR)
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Credit Markets Update Q4 2022
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KPMG Corporate Finance LLC’s investment bankers have extensive Consumer Markets transaction and industry experience, which enables them to understand the industry- specific issues and challenges facing our clients.
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