Monthly European Loan Market Update - June 2019

Monthly insights and updates from the Invesco Fixed Income team

Jun 12, 2019 | Invesco Fixed Income

The Credit Suisse Western European Leveraged Loan Index (“CS WELLI”) returned -0.04% in May, comprised of principal return of -0.42% and interest return of +0.38%.1 Year-to-date (“YTD”) returns are 2.97%.1

A general risk-off tone for the month was fueled by US-China trade/tariff discussions – and tweets – coupled with slowing global growth projections. Bond markets benefited, with Treasuries and Bunds returning +2.5% and +1.5%, respectively. Bunds returned to negative yields, reaching all-time lows. In general, European government debt had positive total returns for the month, with Italian BTPs as the exception. The European Commission is considering fines on Italy for its failure to rein in debt, which reduced investor appetite. Conversely, equity markets were weak. For example, the UK Financial Times Stock Exchange 100 Index fell on the increased probability of a no-deal Brexit after the UK Prime Minister resigned, and the Euro Stoxx Banks Sector Index was down 10% during May.2 Oil was also hit by the risk-off move, with both Brent and WTI decreasing by more than 10% during the month.

 

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^1 Source: Credit Suisse Western European Leveraged Loan Index (CS WELLI) in EUR as of May 31, 2019.
^2 Source: Euro Stoxx Banks Index (EUR) as of May 31, 2019.