Monthly US Loan Market Update - August 2021

Loans gained 0.47% in August, raising year-to-date returns to 3.76%.1 Prices found support from record CLO issuance and steady retail flows while new issuance dwindled in the back half of the month. Risk sentiment also improved in August as concerns about potential market impact from the Delta variant and upcoming Federal Reserve asset purchase tapering eased.
Loans slightly underperformed high yield bonds (0.55%), but outpaced investment grade (-0.20%) in August.2 Lower credit quality resumed its outperformance as “BBs” (0.41%) lagged “Bs” (0.45%) which lagged “CCCs” (0.95%) in total return.1 The average price in the loan market increased by 18 basis points to $98.46.3 At the current average price, senior secured loans are providing a 4.78% yield inclusive of the forward LIBOR curve.3