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M&A Fever Drives Record Loan Issuance

Reuters
Friday, 29 Dec 2006 | 1:55 PM ET

U.S. loan issuance soared to a record $1.67 trillion in 2006 as mergers and leveraged buyouts spurred new sales of loans and high-yield bonds, according to Reuters Loan Pricing Corp.

Loans for non-investment grade companies totalled $612 billion in 2006, exceeding the record $500 billion last year and more than doubling totals seen in 2000.

Companies also sold $137.1 billion of high-yield bonds this year, compared to $100 billion in 2005. J.P. Morgan led U.S. high-yield bond underwriting, followed by Citigroup and Credit Suisse, Reuters data showed. J.P. Morgan also was the lead underwriter for loans.

"The boom in M&A and specifically LBO activity has been well supported by the leveraged finance markets," said Meredith Coffey, director of analysis at Reuters LPC. "Both the U.S. high-yield bond market and leveraged loan markets have had a banner year."

Loans for investment-grade companies added $721.3 billion in issuance, and other loans made up another $339.1 billion, the data showed.

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