Loan prices weathering HY exodus

摘要

US secondary loan prices have stopped rising in a more volatile environment. Federal Reserve chair Janet Yellen's comments that high-yield bond valuations looked stretched prompted investors to pull US$2.4bn from bond funds last week as geopolitical tensions are rising. While strong demand from CLO investors is continuing to insulate loan prices, as it did during an earlier period of weakness in April, loan traders are keeping a close eye on prices for signs of softening or further weakness. Unease that the leveraged finance market had become frothy heated up in mid-July when Yellen highlighted lower-rated corporate debt as an area where "valuations appear stretched," in her semi-annual report to Congress.