- Strong demand and declining yields have ushered in a wave of refinancings within the senior secured loan market in 2017. As we noted in early May, for example, year-to-date new senior secured loan issuance rose approximately 55% due to refinancings.1
- However, refinancing activity has been significantly more prominent within the large corporate senior secured loan market than it has been among middle market issuers.2
- According to Thomson Reuters, new issuance within the large corporate market (outside of refinancing activity) has declined to an all-time low of approximately 33%.2 This means that most new senior secured loans issued by large corporations are being used to refinance existing debt at a lower rate.
- Within the middle market, the solid majority of senior secured loans (approximately 72%) have been issued as new debt, rather than to refinance or reprice existing debt.2
- The new issuance dynamics across these markets have helped to support today’s middle market yield premium, which sits approximately 133 basis points above large corporate loans and above its average since the first quarter of 2011.2
1 J.P. Morgan High-Yield and Leveraged Loan Morning Intelligence, April 28, 2017.
2 Thomson Reuters LPC Middle Market Weekly, The Middle Market Opportunity, June 16, 2017. Based on sponsored new issuance.
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