Ending in style

Ending in style

Published: Dec. 3, 2021

European Leveraged Loan Index (ELLI) has registered a positive performance of +0.2% in November (+0.24% excluding currency effect), while year to date return reached +4.71% (+4.41% excluding currency effect).

European leveraged loan market is gearing up for a strong ending to 2021 as borrowers look to tap into the increasingly robust bid for assets, even after a sturdy year for issuance. 

borrowers have been able to increase the sizes of their facilities, while issuers continue to tap into demand with new opportunistic transactions. This kind of supply will add to what has already been a really strong year for the European loan market: while the 2021’s total volume will probably not exceed the record of 2007 (€162.64 billion), the last wave of primaries in December will be enough to ending the year in style, making 2021 the strongest term since 2007.

Looking at the returns side, Euro denominated TLB yields has increased in the last quarter, after a strong first semester where spreads tightened. Taking into the equation the impact of the Omicron variant, we know that European loans generally outperform rival asset classes during periods of volatility, therefore we see any potential weakness in the coming weeks as an opportunity to add assets at better yields.