Weekly Market Summary

Extra Credit^*

• In November, leveraged-loan prices rose to their highest since May 2022, and 68% of the loan market now trading above par—a six-and-a-half year high. This comes amid the largest inflows since February 2022 and a record month of CLO origination. CLO volume totaled a record $61.3 billion gross in November ($27.7 billion excluding refi/resets) and totals $445.8 billion gross and $187.4 billion net year-to-date.
• Leverage-loan funds reported a $5.8 billion inflow in November, which compares with $2.7 billion of inflows in October and -$244 million and -$5 billion of outflows in September and August, respectively. Broken down, ETFs saw $5.2 billion of inflows, while active managers experienced $580 million of inflows. Weekly flows during the month were $444 million, $2.1 billion, $2.0 billion, and $1.2 billion.
• In November, high-yield bond spreads touched inside 300 basis points for the first time since July 2007 amid receding growth concerns, mostly benign earnings, and rising macro visibility following the U.S. election results. November also produced the lightest issuance since October 2023. CCCs outperformed the high-yield index for a fifth consecutive month.
• High-yield bond funds reported inflows of $1.8 billion in November, which followed monthly inflows of $2.3 billion (October), $3.9 billion (September), $1.4 billion (August), $4.8 billion (July), $1.5 billion (June), and $4.8 billion (May). April saw -$5.4 billion in outflows, after three more months of inflows: $708 million in March, $435 million in February, and $3.3 billion in January. While 10 of the 11 months so far in 2024 have seen inflows, last year there was an even mix of monthly inflows and outflows.
• High-yield ETFs accounted for $1.9 million of inflows in November, while actively managed funds reported an -$120 million outflow. Weekly flows during the month were $457 million, $2.1 billion, $451 million, and -$65 million.
• In November, there were four defaults totaling $4.9 billion with $1.5 billion in high-yield bonds and $3.5 billion in loans. There were also three distressed transactions totaling $1.9 billion in bonds ($140 million) and loans ($1.8 billion).
• Bank-loan and high-yield bond default rates, excluding distressed exchanges, finished September at 1.30% for high-yield bonds and 0.55% for bank loans, up and down from 1.18% and 0.98% in the month prior. This is also well below the long-term historical default rate of 3% for loans and 3.4% for high yield, and the historical post-Global Financial Crisis default rates of 2.3% and 2.5%, respectively.

Sources: Bloomberg and JP Morgan as of 12/2/24.