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  November 1, 2017
 Written by Raquel Mozzer, Dealogic Research

In a stellar year for global leveraged finance, single B-rated deals account for over half of the revenue from rated deals.

LevFin volume hits a record high

The leveraged finance (LevFin) market has soared to a record volume, due largely to lower interest rates and strong refinancing activity from earlier in the year. This year’s volume of $970.7bn is a new YTD high, 31% higher than the previous record of $743.5bn set in 2013. LevFin core revenue totals $9.4bn, of which high-yield bonds account for $3.0bn and institutional loans account for a record $6.4bn.

Single B-rated companies take the lead

Despite the drop in interest rates this year, single B-rated deals dominate the total LevFin market in volume, revenue, and average yields. For S&P-rated companies*, single B-rated issuers have raised $391.1bn in volume and $3.6bn in revenue, which accounts for a majority all LevFin activity and fees. Further, while the average margin for institutional loans has dropped 17% to a 4.0% yield, high-yield bonds have smaller declines. The average yield to maturity for the high-yield market is 6.6%, falling 6% from last year’s average of 7.0%.

In comparison, double B-rated debt totals $260.0bn in volume and $2.2bn in revenue, while triple C-rated or less total $35.7bn and $547m, respectively. Single B-rated bonds are more attractive for buyers than double Bs due to higher yields, while offering more security against default compared to triple C-rated bonds or lower.

Multi-billion dollar single B-rated deals

Major revenue-generating single B-rated deals priced this year. Such deals include Change Healthcare’s $5.6bn loan, Team Health Holdings’ $3.2bn loan, and Avantor’s $4.1bn bond. Together, these three deals generated around $250m in revenue.

Experts speculate that a balance-sheet reduction by the US Federal Reserve would increase the supply of investment-grade bonds. The reduction would make the cost of borrowing money more expensive while giving investors less incentive to buy high-yield bonds. However, single B and other junk-rated debt have not lost momentum, and the market appetite for LevFin deals continues strong.


Contact us for the underlying data and analysis on the LevFin market, or learn more about the Dealogic platform.

Data source: Dealogic, as of October 30, 2017


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