Holiday mutes loan market activity; funds see $146 million Friday outflows

By Paul A. Harris

Portland, Ore., Sept. 28 – The observation of Yom Kippur served to mute activity in the leveraged markets on Monday, according to a trader active in syndicated loans and junk bonds.

The dedicated leveraged loan funds had $146 million of net outflows on Friday, according to a market source.

Bank loan ETFs had $122 million of outflows on the day.

Actively managed bank loan funds saw $24 million of outflows on Friday, the source said, adding that those numbers continue what has generally been an extended period of outflows.

The combined funds saw $261 million of net outflows in the week to the Wednesday, Sept. 23 close, and have sustained $25.4 billion of net outflows in the year to Friday's close.

On a price basis syndicated bank loans fell 21 cents on Friday, the market source said, adding that the index had fallen 79 cents since Sept. 16.

By comparison the junk bond index fell $1.77 during the same interval.

The leveraged loan index outperformed the high-yield index by 198 basis points in September to Friday's close, the market source said, adding that it's the largest outperformance by the loan index since October 2018, a reversal of fortunes relative to July, when the high-yield index outperformed loans by 262 bps, junk's largest outperformance of loans since September 2009.

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