LSTA Panel: New loans trade strong; distressed volume falls

By Andrea Heisinger

New York, Oct. 13 - Trading of loans remains relatively strong, while interest on the distressed side has fallen, panelists at the Loan Syndications and Trading Association said Wednesday.

In the past couple of months, the size of new loan deals has been upsized while high-yield bond deals were downsized, said James Nessel of Citigroup.

"New issue has been phenomenal in trading," he said of the loan market secondary, adding that a lot of the bonds disappeared and might not be seen trading for a while.

While trading of loans has been strong, trading on the distressed side fell 20% in the past year from the 2009 high, according to a chart presented by moderator Ted Basta of the LSTA.

"The distressed trading market in the U.S. has pretty much run its course," said Brian Yorke of Halcyon Loan Investors LLC. "It's not too early to worry about the maturity wall in 2013 or 2014."

The 2011 loan trading volume is seen at between $400 billion and $450 billion, panelists said.

"Most people fixed their portfolios," said Barry Zamore of Credit Suisse. "We're seeing a runoff from that. The need for secondary trading is not as great as two years ago."

Loan trades have been declining, and it's easier to sell than it is to buy, said another panelist, Kim Harris of Sankaty.

"There is liquidity in the market. The biggest issue is settlement times and transparency."

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