You Can't Keep Lev Loans Down, Kind Of Like Hillary
April 25, 2008
Furiously compelling (and long) as the campaign has been, I somehow have neglected to employ any sort of clever presidential simile or metaphor in any of my previous columns. I'd like to believe that, as an American, I'm due at least one. And now seems a fine time to cash in.
Hillary Clinton won Pennsylvania last week, proving once again that her candidacy will not die. (By the way, I cannot claim credit for the death bit. Being a huge fan of Jon Stewart and TheDaily Show, especially his montages of those insightful television journalists and their infectious banter, I have to admit that I've blatantly stolen it from the role call of clever news professionals he featured using it last week. "Obama cannot kill her off!" they cried. "He can't finish her!")
And like Hillary (ok, here we go, and this part is all mine) the leveraged loan market is demonstrating that it will not die either. Yes!
Despite lousy news from sectors such as restaurants and retailers (as our front-page stories by Matthew Sheahan and Richard Kellerhals show) new signs of life have popped up in recent weeks. Bids on selected large institutional flow loans reached more than 92.1 last Tuesday, up almost a point from the week before and nearly 7% since the low of 86.3 in February 2008, according to Standard & Poor's LCD. This marks a month-long rally in loan prices and a three-month high.
Moreover, the amount of institutional leveraged loans on the U.S. forward calendar has finally dropped below that psychological milestone of $100 billion, to just over $91 billion, S&P LCD says. And not only that, Deutsche Bank is preparing another multibillion-dollar sale of its hung loans, according to a report in the Financial Times. This latest deal involves European debt, good news for our comrades across the Atlantic, where the overhang has been slow to budge.
This would mark the third big sale of leveraged loans by a bank this month, with Citigroup selling $12 billion, and Deutsche following with about $5 billion of U.S. leveraged loans (HYR, April 21, 2008).
But like all clever presidential similes, mine must likely come to an end. Because, as we all know, many predict Hillary's campaign will meet its bloody demise, whether it be with the final primaries in June or in especially gory fashion at the Democratic Convention in August. And while no one can guarantee this prediction, we can pretty much rest assured that the leveraged loan market will indeed live on. Good night, and God bless America.
(c) 2008 High Yield Report and SourceMedia, Inc. All Rights Reserved.