CHICAGO - (Business Wire) The U.S. leveraged finance markets continued its streak of increased levels of issuance and solid performance during the third quarter of 2009 (3Q'09), according to Fitch Ratings. Following record-breaking performance in 2Q'09, yield spreads continued to narrow, generating positive returns to investors for the third quarter in a row. "Generally improving economic data and better-than-expected corporate earnings are encouraging investors to move back into riskier asset classes," said Eric Tutterow, Managing Director, Fitch Ratings U.S. Leveraged Finance.
New high yield bond issuance totaled $38.9 billion during 3Q'09, down 25.1% compared to $51.9 billion issued during 2Q'09, but still up significantly compared to the previous seven quarters. Approximately 37.4% of new high yield issuance was in the form of secured notes.
Issuance in the U.S. leveraged loan market also declined during 3Q'09 compared to 2Q'09 with total syndicated loan issuance of $95.1 billion, down 40.4% from $159.5 billion in 2Q'09. Leveraged loan issuance totaled $47.4 billion in 3Q'09, down 32.5% from $70.3 billion in 2Q'09.
Of particular note is the ongoing increase in debtor-in-possession (DIP) loan issuance, which reached $14 billion during the first three quarters of 2009. DIP volume in 2009 has already exceeded the total DIP volume recorded during each of the last eight years.
Fitch further notes that the overall pace of speculative-grade downgrades declined again in 3Q'09. Pressure on credit quality overall has eased in recent months, driven in part by lender willingness to amend and extend loans rather than force them into a default, and increased credit availability in the public markets.
The full 'U.S. Leveraged Finance Quarterly Review' is available on the Fitch Ratings web site 'www.fitchratings.com.' Full comparative data on high yield bond and loan data is available, as well as comparative performance trends.
Additional information is available at 'www.fitchratings.com'.
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Fitch Ratings
Brian Bertsch, +1-212-908-0549 (New York)
brian.bertsch@fitchratings.com
Eric Tutterow, +1-312-368-3218 (Chicago)
Darin Schmalz, +1-312-606-2324 (Chicago)
Tushar Makwana, +1-312-368-3265 (Chicago)
