European Leveraged Loan Market Suffers Dearth Of New Issuance
Amid the chaos and volatility experienced by the world’s financial markets during the first half of 2002, the European leveraged loan market continued to suffer from a dearth of new issuance and a number of high profile corporate restructurings, according to a special report by Fitch Ratings. The report, titled ‘The only way is up?’, states that following the slowdown experienced in the second half of 2001, the recovery in primary deal flow was weaker than expected in the first half of 2002. Fitch observed an increase in the number of secondary buy-outs and refinancings as the virtual closure of the Initial Public Offering market led private equity sponsors to explore alternative exit strategies. Looking ahead, the leveraged loan and leveraged buy-out (LBO) pipelines reflect a healthy level of activity, which should result in improved issuance levels during the second half of the year. However, ongoing economic uncertainty is likely to perpetuate the current challenging operating environment for existing leveraged transactions.