The leveraged loan market in Europe remains in a bleaker state than across the Atlantic with a volume of $45.35B for the year to date, down 83.5% when compared to the same period last year which saw $275B in volume, with average deal sizes more than halving from $861B in 2007 to $374B thus far in ’08. Industry players are predicting that no serious recovery will come until the end of 2009, with the remainder of 2008 being as rough as the earlier portion of the year.
Also, the majority of bulk deals (probably about 80%) have been done as Europe cleared most of its backlog of $107.3 billion of unsold leveraged loans. While Private Equity buybacks have removed a portion of the market’s overhang, additional sales of €40-100M to PE firms are predicted. The European leveraged loan market will gradually become better over the course of 2009, slowly at first, then gaining momentum as the year progresses (the second half of 2009 should see the return to normal levels. That’s nothing scientific, just my feeling. Quarter-on-quarter results have already witnessed improvements in the U.S. and it’ll take Europe a bit longer to see the same). The best time to learn is in a down market!