The leveraged loan market experienced a lackluster year in 2011, with returns down and bids float in both the U.S. and Europe, according to Markit.
Total return for the Markit iBoxx U.S. dollar-denominated Leveraged Loan Index finished the year at 0.90%, down from the high mark of 3.16% in May and up from the low of negative 3.36% in late august. The total return for the Markit Liquid 100 index is negative 0.05%. The historical average for loan returns is approximately 5% per year.
The average loan price bids for both North America and Europe are down over last year. The average bid price on a leveraged loan in North America is 91.28 cents on the dollar, compared with 92 as of Jan. 3, 2011. The average bid on a leveraged loan in Europe is 86.81 cents on the dollar, down from 89 on Jan. 3, 2011.
Otis Casey, director and loan market analyst for Markit, said that 2011 was “lackluster, at best, for loans.” He noted that we could see more of the same this year, “but much depends on what happens in Europe and how the European economy performs in the face of