KBRA released research examining trends across the structured credit landscape. It has been a banner year for broadly syndicated loans (BSL) and middle market collateralized loan obligations (CLO).
With approximately $146 billion of new issuance year to date (YTD), 2024 has already eclipsed the full-year (FY) 2023 new issuance total of $115 billion. The market for floating rate issuers should further benefit from the Federal Open Market Committee’s (FOMC) 50-basis point (bp) cut to the federal funds rate on Sept. 18.
Cheaper funding costs for floating rate liability structures can make arbitrage dynamics more attractive (assuming stable loan spreads). With inflation cooling and additional rate cuts projected well into 2025, the backdrop for underlying corporate borrowers — which have been burdened by elevated borrowing costs for the better part of the past few years — is constructive.
The report provides an overview of the overall structured credit market, including new issue deal volume, benchmark spread levels, notable activity and other trends through Q3/24. Access the report online.
