DATA & INSIGHTS
Findings from Q2 ’19 SFNet’s ABL Survey As highlighted in the 2019 Secured Finance Market Sizing and Impact Study, the ABL market has in recent times benefited from a strong economy, low default rates, an abundance of complementary capital and easing regulatory hurdles.
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THE SECURED LENDER NOV. 2019
BY THE SFNET DATA COMMITTEE
For the first half of 2019 these tailwinds continued except for a brief disruption in the leveraged loan markets at the beginning of the calendar year.
Correlation (or lack thereof?) We acknowledge there is less than perfect correlation between the ABL market and certain economic / market indicators. However, we consider the following data as we evaluate the Q2 ABL market as there is some degree of inter-connectivity: Economic/ Capital Markets Indicators
Q1 ‘19
Q2 ‘19
US GDP growth
3.1%
2.0%
10 year Treasury yield
2.40%
2.00%
90 Day Libor
2.60%
2.33%
ISM Purchasing Managers Index1
55.3
51.7
Consumer Confidence Index2
124.1
121.5
Commodity Price Index3
120
116
WTI $/bbl
$60
$58
Hot Rolled Coil Steel/ton
$697
$536
USA M&A Volume4
$478B
$631B
Leveraged Loan and High Yield Volume
$193B
$189B
C&I Loan Growth
9.3%
2.5%
Institute for Supply Management Purchasing Managers Index 2 Conference Board Consumer Confidence 3 IMF World Commodity Price Index 4 Source: FactSet 1
In Q2 there were several forces that seemed to contribute to a vibrant ABL market including: n Robust M&A volume n GDP growth n Resurgence in the High Yield bond market n Lower interest rates. Notwithstanding the advantageous factors noted above, there were some darker clouds forming (escalating global trade tensions) on the economic horizon as we wrapped up Q2
