US Loan Market Snapshot: September 2023

Monthly US loan market update: September 2023

Loans delivered solid returns in September, gaining 0.88% during the month and bringing year-to date total returns to 9.91%.¹ Despite increased primary supply and weaker risk markets, loan prices edged up 0.11% during the month. More impactfully, coupon income contributed another 0.76% to September’s total return. Meanwhile, the Federal Reserve (Fed) provided updated policy guidance at their September meeting which further signaled elevated base rates at least through 2024, implying today’s high carry environment is expected to persist for the foreseeable future. 

During September, loans outperformed high yield and investment grade, which returned -1.16% and -2.45%, respectively, and year-to-date are also outpacing the 5.97% and 0.45% returns for high yield and investment grade bonds respectively.² Within loans, “BBs” (0.54%) trailed “Bs” (0.95%) and “CCCs” (2.18%) in total return during the month.¹ The average price in the loan market rose 30 basis points (bps) to 94.83.³ At their current average price, senior secured loans are providing a 10.11% yield inclusive of the forward curve.³

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1 Credit Suisse Leveraged Loan Index as of September 30, 2023. 2 Credit Suisse Leveraged Loan Index and Bloomberg as of September 30, 2023. High yield represented by BAML US High Yield Index; investment grade represented by the BAML Investment Grade Index. 3 JP Morgan as of September 30, 2023.