The start of 2023 welcomed the loan market with a collective sense of worry about how leveraged loan issuers would fare, given the immediate impact of higher financing rates engineered by the U.S. Federal Reserve (Fed) flowing through to unhedged issuers’ credit metrics. However, macro resiliency proved to be a stronger tailwind.
For the year, the Credit Suisse Leveraged Loan Index return of 13.0% bested the start-of-year three-year yield, with the average dollar price rising $3.43 to end at $95.32. Source: Credit Suisse. Past performance is no indication or guarantee of future results. This overall uplift has resulted in approximately one-third of the asset class now trading north of par. The default rate climbed to end the year just over 3%—according to J.P. Morgan—eroding some return, but was otherwise manageable and below most participants’ start-of-year forecasts.
Volta Finance Ltd (LON:VTA) is a closed-ended limited liability company registered in Guernsey. Volta’s investment objectives are to seek to preserve capital across the credit cycle and to provide a stable stream of income to its Shareholders through dividends that it expects to distribute on a quarterly basis.