Wheels Come Upwards Off The Leveraged Loan Market: Banks Unable To Offload Loans With Tape Outflows

Over the final vi months ZH, FT Alphaville together with Bloomberg get got been doing the best undertaking keeping rails of what is becoming a existent mess.
From ZeroHedge, December 14:

To cry back it was less than 3 months agone that nosotros wrote that "leveraged loan need is off the charts every bit dangers mount." Since then, a lot has happened inwards the credit market, amongst yields together with spreads blowing out inwards credit inwards a much delayed answer to said mounting dangers and turmoil inwards the equity market, eventually hitting the leveraged loan marketplace too, where every bit nosotros wrote final week, loan prices get got fallen precipitously every bit loan funds suffered dramatic redemptions inwards recent days, most notably the Blackstone leverage-loan ETF, SRLN, which final calendar week saw its largest e'er one-day springtime since its inception.

Fast forwards to today when patch credit appears to get got constitute a shaky, tentative flooring over the final few days, leveraged loans - which started falling after than other markets this quarter - are all the same sliding, together with every bit long every bit funds croak along pulling coin out, volition in all probability croak along falling.

While floating-rate loans tend to rails bonds, they are oftentimes slower to react both to the upside together with downside. Since Oct. 1, loans get got lost nigh 2%, including a 1% drib this month, patch both high-yield together with investment degree bonds rose slightly. In fact, since nosotros final checked inwards on the S&P/LSTA lev loan index last calendar week it has fallen some other total point, together with is forthwith downward to 95.4, its lowest cost inwards over 2 years.

"It’s a fleck of a select grip of up," James Schaeffer, deputy CIO at Aegon Asset Management told Bloomberg. "Aggressiveness - on terms together with construction - has created to a greater extent than cost volatility than inwards the high-yield market, forthwith that we’ve seen need for loans irksome a bit."

That's putting it mildly: every bit nosotros noted final week, JPMorgan had to slash the cost on a $210 i chiliad 1000 loan to 93 cents on the dollar from par to sweeten investor need together with assist finance a soul jet takeover. This represented i of the steepest discounts seen inwards the leveraged loan marketplace this year. And amongst the marketplace on the verge of freezing, the size of the bargain was cutting past times $70 i chiliad 1000 from the originally targeted amount. Meanwhile, inwards Europe, the marketplace appears to get got already locked up, every bit 3 loans were scrapped over the final 2 weeks. To wit, motion painting identify chain Vue International withdrew a 833 i chiliad 1000 pound-equivalent ($1.07 billion) loan sale. While the bargain was meant to by together with large refinance existing debt, roughly 100 i chiliad 1000 pounds was underwritten to finance the company’s acquisition of High German grouping CineStar.

More deals were pulled the prior calendar week when diversified manufacturer Jason Inc. became at to the lowest degree the 4th issuer to fighting a USA leveraged loan. Additionally, Perimeter Solutions also pulled its repricing attempt, Ta Chen International scrapped a $250MM term loan laid to finance the company’s buy of a rolling mill, together with Algoma Steel withdrew its $300m piece of occupation out financing. Global University System inwards Nov also dropped its dollar repricing....MORE

Here's the link listing inwards Nov 8's "The Fed Broadsides $1.3-Trillion “Leveraged Loan” Market ":
Previously:
Ha! "Wall Street Loves These Three Letters. The Rest of Us Should Be Wary."

Corrected—Next Big Short? "Warnings mountain for leveraged-loan market"

“Concerned” Bank of England Raises Alarm nigh Growth of High-Risk Loans"

Bonds: And Then There's the ETF/ETF holdings Liquidity Mismatch

The Corporate Bond Market Is Getting Junkier

And many more, we're a wee fleck concerned nigh this. 
Also:
Credit "Death Spiral" Accelerates As Loan ETF Sees Record Outflow, Primary Market Freezes
"Leveraged Loan Market Freezes As Prices Plunge, Four Deals Pulled"
Spurious (deceptive) Chart Correlations