After a long winter of price declines, March has brought a welcome thaw to the leveraged loan market. Spurred by improved – though still weak – technical conditions and better investor sentiment, the S&P/LSTA Index gained 1% in the week ended March 8, its best weekly gain since October 2011.
The average bid price of Index loans jumped 0.91 percentage points, to a six-week high of 90.31. As a result, the Index return is now even on the year, at 0.00%, after being as low as –1.51% on Feb. 17.
The gains of early March are hardly limited to the loan market. Across risk asset classes, prices jumped as a result of rising oil prices and a growing conviction, for now at least, that economic growth will persist, albeit sluggishly, in the quarters ahead.
With this in mind, the S&P 500 climbed 2.49% from March 1 through March 8, while the S&PDJ High-Yield index advanced 2.74%. Drilling down to the loan market, inflows to loan mutual funds, based on LCD’s own collection effort, blossomed to $568.14 million between March 2–8, the most since March 7–14 of 2014. Additionally, the CLO market seems a bit less stuck after late February’s quartet of prints and a slew of launches in early March.
This story first appeared on www.lcdcomps.com, LCD's subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.