If the leveraged loan market used an avatar, Goldilocks would be an apt choice for the second quarter.
Technical conditions cooled slightly from the sauna-like levels of the first quarter, but remained just right for issuers to print new regular-way loans to support M&A trades and dividends. Retail flows, which turned negative for the first time since 2012, were largely responsible for the second quarter's less effusive tone.
With mutual funds reeling, CLO creation clicked into overdrive, keeping a floor under secondary levels and providing ample demand for new-issue supply.
Without souped-up repricing activity to goose the stats, new-issue volume tracked lower in the second quarter. In all, issuers tapped the market for $152.9 billion of new loans, including $113.5 billion of institutional tranches. That compares to $169.1 billion/$128.5 billion during the first three months of the year and $163.9 billion /$117 billion during the same period in in 2013
For the first half as a whole, the market also downshifted from the record pace of a year ago. For the first six months of 2014, leveraged loan volume came in at $322.0 billion total/$242.0 billion institutional, versus $352.9 billion/$266.1 billion during the same period last year.