The European leveraged loan and high-yield bond markets picked up steam over the past month. Indeed, prices on loans and bonds hit recent highs, and volume - especially in high yield - soared. New this month: a chart detailing issuers whose debt advanced, vs. declining issuers. Connect with LCD Facebook: http://www.lcdcomps.com/facebook LinkedIn: http://www.lcdcomps.com/linkedin Twitter: http://www.twitter.com/lcdnews Web: http://www.lcdcomps.com

1. European Leveraged Loan Market Update
OCTOBER - 2010
Sucheet Gupte - Associate Director
Wednesday, October 20, 2010

2. Copyright 2010 Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
No content (including ratings, credit-related analyses and data, model, software or other application or output therefrom) or any
Text
part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a
database or retrieval system, without the prior written permission of S&P. The Content shall not be used for any unlawful or
unauthorized purposes. S&P, its affiliates, and any third party providers, as well as their directors, officers, shareholders, employees
or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P
Parties are not responsible for any errors or omissions, regardless of the cause, for the results obtained from the use of the
Content, or for the security or maintenance of any data input by the user. The Content is provided on an "as is" basis. S&P
PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS,
SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE
CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be
liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs,
expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with
any use of the Content even if advised of the possibility of such damages.
Credit-related analyses, including ratings, and statements in the Content are statements of opinion as of the date they are
expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment
decisions. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not
be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or
clients when making investment and other business decisions. S&P’s opinions and analyses do not address the suitability of any
security. S&P does not act as a fiduciary or an investment advisor. While S&P has obtained information from sources it believes to
be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any
information it receives.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity
of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P
business units. S&P has established policies and procedures to maintain the confidentiality of certain non-public information
received in connection with each analytical process.
S&P may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of
securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are
pause
made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and
www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and third
party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees.
Wednesday, October 20, 2010

3. The September Loan Market
• Shotgun start: Loans, high-yield bond new issues
thrive, secondary surges
• Loans return 0.96% in September; 5.1% YTD
• Market tone improves, sellside and buyside
out
• Forward calendar thins from recent highs, but remains
well above last two years
• Inflows into US funds remains strong, boding well
for Europe?
Wednesday, October 20, 2010

4. European Loan Flow Names - 2010
98
96.70 as of
15 October
96
Text
94
3Q2010: 266 bps
92
1/7/10 3/4/10 4/29/10 06/27/10 08/19/10 10/15/10
. Source: LCD - Leveraged Commentary & Data
Wednesday, October 20, 2010

5. European HY Bond Flow Names - 2010
100
100.37 as of
15 October
98
96
Text
94
3Q2010: 679 bps
92
90
88
1/28/10 3/25/10 5/20/10 7/15/10 9/9/10 10/15/10
Source: Bloomberg
.
Wednesday, October 20, 2010

6. ELLI Multi-Currency Loan Index Return (quarterly)
17.5%
13.5%
2010
3Q: +1.75%
2Q: - 0.14%
9.5%
YTD: +6.14%
5.5%
1.5%
Text
(2.5%)
1Q08 3Q08 1Q09 3Q09 1Q10 3Q10
.
Source: LCD - Leveraged Commentary & Data
Wednesday, October 20, 2010

7. ELLI Multi-Currency Loan Index Return (monthly)
7.0%
September: +0.96%
4.8%
2.5%
0.3%
Text
(2.0%)
3/09 6/09 9/09 12/09 3/10 6/10 9/10
.
Source: LCD - Leveraged Commentary & Data
Wednesday, October 20, 2010

8. New-Issue Loans vs. HY Bonds, by Quarter
25
HY bonds
Loans
19
€billions
Text
13 €9.93B
6
€11.52B
0
1Q08 3Q08 1Q09 3Q09 1Q10 3Q10
Source: LCD - Leveraged Commentary & Data
.
Wednesday, October 20, 2010

9. New-issue Loans vs. HY Bonds, by Month
12
HY bonds
Loans
9
€billions
Text
6 €4.7B
3
€5.5B
0
7/09 9/09 11/09 1/10 3/10 5/10 7/10 9/10
Source: LCD - Leveraged Commentary & Data
.
Wednesday, October 20, 2010

10. Senior & Mezzanine Debt Forward Calendar
€7B
5
Text
3
1
01/05 07/08 13/11 19/02 28/05 03/09
2009 2010
Source: LCD - Leveraged Commentary & Data
Wednesday, October 20, 2010

11. ELLI Default Rates – European Leveraged Loans
by principle amount by number of defaults
13% 16%
9% 12%
6% 8%
5.33% as of Text 8.62% as of
31 August 2010 31 August 2010
3% 4%
0% 0%
12/31/07 8/31/09 8/10 12/31/07 8/31/09 8/10
. Source: LCD - Leveraged Commentary & Data
Wednesday, October 20, 2010

12. What’s in Store: 4Q Trends
• Market tone: best it’s been in two years
• Primary calendar expected to grow in 4Q and/or 2011
• High-yield bond volume expected to continue (loans
might lag)
out
Wednesday, October 20, 2010

13. European Leveraged Loan Market Update
October - 2010
Sucheet Gupte - Associate Director
Wednesday, October 20, 2010