Market Synopsis

Federal Reserve (Fed) uncertainty, falling commodity prices and weak global growth have led to a sell-off in many asset classes. Much of the downward pressure on senior loan prices can be attributed to technical factors: mutual fund outflows, a slowdown in Collateralized Loan Obligation (CLO) formations, and an increase in the supply of senior loans.

Why We’re Still Positive on Senior Loans

As senior loans have traded off notably, they are now available at a fairly rare discount to their par value. That provides potential for attractive price appreciation should market sentiment improve.

As of year-end 2015, senior loan fundamentals appear stronger than periods in the past when loans have traded at these levels. According to S&P Research, average leverage ratios are lower and average interest coverage ratios are higher than prior periods when loans have traded in the low 90s or lower.

Read more in our latest update on the senior loans market and our strategy.

Follow @OppFunds for more news and commentary.