Bloomberg has expanded its leveraged loan indices to both European and global markets, building on growth in the European market and increased client demand.
Jasvinder Singh, fixed income index product manager at Bloomberg Index Services Limited, told The DESK, “We believe that this product brings unprecedented transparency to the leveraged loan market.”
The European leveraged loan market has grown significantly over recent years, now representing 22% of overall global loan benchmarks with a market value of approximately US$400 billion.
As of 30 June, the European index, ELOAN, has a market value of €340 billion across 462 EUR and GDP-denominated broadly syndicated loans. Both high-yield and unrated bonds with a minimum 150 million local-currency value are included.
The global index, GLOAN, is valued at US$1.8 trillion across 1,759 loans in global markets. Broadly syndicated loans from public and private companies are included.
“We include institutional loans only, which are secured and fully signed and funded. We exclude anything that’s generally not considered broadly syndicated,” Singh explained.
Alongside ELOAN and GLOAN, Bloomberg has created approximately 100 sub-indices designed to improve granularity across features such as geography, credit rating and liquidity thresholds.
Users can combine these indices with others at Bloomberg.
Singh noted, “We know that this is not going to address all the client needs, so if a client comes to us with specific needs we can look into launching an index based on pretty much any data on the Bloomberg Terminal.”
This combinability will allow institutional investors to better tailor their exposure, the firm said. Both a monthly returns and daily projected universe provide a forward-looking view of index composition.
“Certain loan index providers only provide the constituents after a rebalance happens. We publish a projected universe in addition to constituents at the moment. That gives a view into how the index would look in the upcoming month. That gives clients the ability to adjust their trades as they head into the month-end rebalance,” Singh commented.
Bloomberg launched the US leveraged loan index late last year. The index now tracks approximately 1,300 USD-denominated loans with a total value of US$1.3 trillion, and has delivered a cumulative 43.81% return. This exceeds returns on other US Bloomberg indices, including US high yield (40.59%) and US floating rate (24.29%).
“As we were heading into the US launch, we were also contemplating a European loan index as well, but at that point in time, we did not see as much interest,” Singh recounted.
“However, once we came out with the US index, we heard from a number of European clients that they wanted us to offer a similar index to capture the European market.”
The index suite uses BVAL, Bloomberg’s evaluated pricing service, and the firm’s syndicated loans data solutions services to facilitate corporate credit trend tracking, the assessment of individual public and private credit strategies, and improved portfolio design.
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