Q1 2017 Market Update

Marlborough Partners, the independent debt advisory firm, today published its report on the European leveraged finance market for Q1 2017.

 

The report, analysing data from a number of sources, shows European leveraged loan volumes increased by more than 140% compared to Q1-’16 (€34bn vs. €14bn) aided by too much money chasing too little opportunities in the market. The European High Yield market goes hand in hand with the European leveraged loan market reflected by volumes up c. €17bn (c. 2.3x higher compared to the same quarter last year) with low-yielding double-Bs dominating the market as well as a high number of refinancings.

In the UK, institutional spreads have come down further, following the trend initiated in Q4-’16, resulting in an average institutional spread of c. 386bps at the end of Q1-’17. This trend is driven by strong underlying market conditions and an ongoing imbalance in supply and demand.

Marlborough Partner, Markus Ehrler, said: “During the first quarter of 2017 we’ve seen significantly higher leveraged finance volumes combined with a substantial relaxation of financial covenants (more than 70% of European large market deals are done on a cov-lite basis). Furthermore, the amount of available liquidity in the market is such that some deals are now repricing within a very short time frame (some within a 3 to 6 months period).”

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