Loans Update – Increased capacity

European Leveraged Loan Index (ELLI) has registered a positive month-to-date performance, bringing returns to +0.10% (+0.08% excluding currency effect), while year to date return reached +3.31% (+3.04% excluding currency effect).

The supply continued stronger in the second week of July, no signs of slowing down due to summer’s vacation yet. Yields seem to have found a floor and are moving horizontally in a tight range.

One of the most important aspects of a loan is the borrower’s cash flows capacity to endure the burden of the interests due. On average, interest coverage ratios have been improving when compared to EBITDA and flattish after capex expenses. However, the year 2021 has been presenting the best cash interest ratios of the last 11 years.