Banks strive to rebuild the loan market for the digital age
Euromoney, is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023
Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Banks strive to rebuild the loan market for the digital age

Financial Technologies - binary code background with dollar banknotes
Photo: Getty Images

New technology ventures and trading platforms promise compressed settlement times and improved liquidity in a secondary loans market increasingly dependent on non-bank investors.

Last week, on October 19, the Loan Syndications and Trading Association (LSTA) published third-quarter data on trading in the US syndicated loan market.

The good news is that prices were up. The bad news is volumes were down.

Floating-rate loans have been a sound investment in the first 18 months of rising rates.

Theodore Basta, executive vice-president of market analytics and investor strategy for the LSTA, points out that the Morningstar/LSTA Leveraged Loan Index registered the strongest quarterly total return (3.5%) in three years – which drove the year-to-date return above 10%.

Basta notes that monthly trading levels surged more than 200 basis points in the quarter, to an average trade price of 96.5.

“Even more impressive, the median trade price rallied to a 99-handle, a level not seen since last year’s first quarter,” he says.

But, even though rising default rates are not yet spreading alarm, as October began, loans were just starting to trade off their highs. And secondary loan trading volume fell to the lowest quarterly level in three years.

pl syndicated p3-960.jpg

While the summer holiday quarter is always a little slack, this follows a sharp drop in the second quarter.



Peter Lee head.jpg
Editorial director
Peter Lee is editorial director. He joined Euromoney straight from Oxford University in 1985, and has written about banking and capital markets ever since, being appointed editor in 1999. He became editorial director of Euromoney in May 2005.