Insight

Monthly European Loan Market Update - August 2020

Monthly US Loan Market Update - August 2020

The Credit Suisse Western European Leveraged Loan Index (“CS WELLI” or “Index”) returned 0.82% in July, comprised of principal return of 0.48% and interest return of 0.34%.1  

During the month, Q2 GDP data was released. Euro area quarter-over-quarter GDP fell by 12% and US GDP fell by approximately 10% (annualized rate of negative 33%). For comparison, pre-COVID-19, the largest decline in US GDP on record was in Q1 1958 when the US economy shrank by an annualized 10%. More recently, during the Global Financial Crisis the US economy shrank by an approximate 8% (annualized) during last quarter of 2008. These numbers are a sober reminder of the severity of current economic downturn.   

There were a few eye-catching moves in July, with Silver (+34%) and Gold (+12%) as standouts. Both precious metals were aided by falling real yields (US 10-year Treasury real yield was below -1% for the first time on Friday, July 31st) and a weaker US Dollar as concerns rise about the long-term consequences of monetary policies introduced to support economies. Positively, the European leveraged loan market continued its recent upward trend, increasing by €0.49 to an average trading level of €93.23 at month end.1 

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1 Source Credit Suisse Western European Leveraged Loan Index (CS WELLI) in EUR as of April 30, 2020.