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Leveraged finance hits record revenue

Global leveraged finance revenues stood at $13bn in 2013 so far, up 37% from $9.5bn generated in 2012 and the highest year to date revenues on record, according to data provider Dealogic.

Leverage finance revenue levels have reached a record high so far this year, according to data from Dealogic. 

In 2013, global leverage finance revenues have totaled $13 billion, a 37 percent increase compared to the $9.5 billion in the same period last year. Revenues from leveraged loans stood at $7.9 billion, which is up 32 percent from $6 billion for the same period in 2012 and is the highest year to date fees generated on record. The research tracked all leveraged finance volume up to 7 August this year. 

Of total leveraged finance revenues, JPMorgan led the ranking with an 8.5 percent share in 2013 year to date, followed by Bank of America Merrill Lynch and Credit Suisse with 8 percent and 5.3 percent respectively. 

Dealogic didn’t provide any details on why revenue levels have risen substantially and declined to comment on the figures. But the rise in leverage finance revenue levels come amid an increase in the issuance of European leveraged loans, another recent study has shown. 

Europe saw its leveraged loan volumes jump to €23.5 billion in Q2 2013, a 47 percent increase on the €16 billion raised in the first quarter, according to debt advisor Marlborough Partners. In the UK alone, loan volumes rose from €2.7 billion in Q1 to €4.7 billion this quarter, a 74 percent increase. Year-to-date loans, which totalled €7.4 billion in the six months to 30 June 2013, were also up by a similar proportion, the firm said in a recent study.   

“Leverage is definitely drifting upwards – and that is on the back of the very strong liquidity we see in the bond market and the loan market,” David Whiteley, managing director and head of leveraged loan syndicate at Lloyds Banking Group, told PEI in a recent interview. 

The current market is pretty active, Giles Borten, head of leveraged finance, EMEA and Asia Pacific and co-head of corporate capital markets EMEA at UBS, told PEI in an interview in May. “We have had a busy quarter, albeit one that has been dominated by refinancing and recapitalisations,” he said. 

Revenues from sub-investment grade bonds, which are loans or bonds related to emerging markets, also grew to $5 billion in 2013, which is a 39 percent increase from the $3.6 billion in the first half of 2012 and the highest year to date revenue on record, according to Dealogic. 

The figures haven’t reached the highest leveraged loan percentage on record, which was in 2008 year to date, when leverage loans accounted for 84 percent of total leveraged finance revenue.