LPC-European secondary loan marketplace holds following Trump victory

Nov 9 Europe's leveraged loan market rattled somewhat on news of Trump's presidential victory with paper dipping in the secondary markets in early morning trading prior to bouncing back as investors held on to assets and demand continued to outweigh provide, banking sources mentioned on Wednesday.

Bids on Europe's secondary loan industry softened by 50bp-100bp first thing on Wednesday morning but regained any losses by mid-morning. The supply side remained unchanged.

The European loan market has become plagued by technicals, flushed with income from CLO and credit fund issuance but constrained by relatively lower event-driven financings.

"Initially the market was nervy. Bonds were off and loans had been bid reduced, oil was lower and gold was higher. There was chance off, protected haven sort moves. Nonetheless it was an extremely brief lived response. The loan marketplace is back to type with demand outstripping supply and people today chasing paper," a loan and bond investor explained.

Numerous investors and traders were hoping to pick up some bargains on Wednesday morning but were faced using a lack of provide, as folks held onto paper and had been reluctant to promote.

There have been similarities during the fast aftermath of Britain's vote to depart the European Union in June, once the bid-offer spread widened as traders showed a willingness to purchase into market weakness, but investors remained unwilling to promote.

"There was bargain hunting early doors but there have been no bargains to become had. We had been hoping there will be loads of provide and dumping but that has not happened," the investor said.

A European syndicate head explained: "Equities are down, crossover is flat. Loans are still properly bid, bonds are down half a stage but consumers are circling. Investors are hoping to get a market place puke to select up names cheaper, but that is not happening still. Time will inform."
The European marketplace is looking to the US market place to view what course that will take. Though several bankers nonetheless program to press ahead with principal loan launches, there might be some delay even though the marketplace digests the information.

There could also be some modifications in pricing and banks will likely be assessing underwriting danger to get a swath of pipeline buyout discounts. There might also be some delay to CLO issuance, nevertheless they are unlikely to get pulled, a European head of leveraged finance said.

"Europe will consider its guidance from your US and on the minute it isn't going to truly feel like it can be planning to fall from bed. There will likely be a short period of uncertainty wherever individuals will wait to determine. Consequently you almost certainly won't obtain a repricing launched this week as lenders will want some self-confidence the industry is there," a second European loan syndicate head stated.

"Arrangers is not going to get an underwriting determination these days or tomorrow but the European market will stay driven by technicals and that should stay unchanged."
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