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By: Jeremy Duffy, Eliza McDougall, Jake Mincemoyer, White & Case

After taking a deep dive in Q2, US leveraged loan issuance picked up in Q3, while European markets gained year on year.

Having navigated extreme market dislocation due to COVID-19 for the past six months, leveraged loan activity in the United States and Western and Southern Europe is giving cause for optimism.

Quarterly leveraged loan issuance in the US reached US$158 billion in Q3 2020, up 9% from US$145 billion in Q2.

Despite a sharp decline in Q2, overall issuance in the country is down less than half a percent year-on-year, from US$632.5 billion for the first nine months of 2019 to US$630 billion over the same period in 2020.

And while loan issuance in Western and Southern Europe was noticeably lower this quarter at US$45.1 billion-down 36% compared to the US$70.5 billion seen in Q2-year-on-year issuance is up. Over the first three-quarters of 2020, issuance reached US$186.3 billion, rising from US$170 billion over the first three-quarters of 2019.

Lenders look beyond immediate cash needs

Leveraged loans have been coping with increased competition from high yield bonds for deal flow since COVID-19 lockdowns began. Many investors pivoted toward high yield bonds, which are not linked to floating interest rates and offer the promise of better yields in the current low-int......................

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