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Invesco - Mon, 02/05/2024 - 06:13

2024 US Loan Market Outlook

Summary:

• 2023 was an exceptional year for loan returns (second highest on record) on both a relative and absolute basis, driven primarily by robust coupon that is near all-time highs1 

• We expect 8% loan returns in 2024,2  again powered by strong carry partly offset by expected price erosion at the lower end of the credit quality spectrum 

• We forecast a 3.75% - 4.25% default rate in 2024 driven by a combination of maturity and liquidity challenges, but which are largely already priced by the market

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1 Credit Suisse Leveraged Loan Index as of December 31, 2023. 

2 There is no guarantee that the forecast will be realized. Forecast is based on coupon plus wider nominal spreads minus base rate declines minus price erosion.

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Invesco

Invesco is a leading independent global investment management firm, dedicated to helping insurance investors achieve their financial objectives. We understand insurers have unique investment needs, from optimizing capital efficiency and yield, to managing reserves and reporting. That’s why we offer specialized solutions across a broad set of asset classes and vehicles. With $1.6 trillion in total assets under management,[1] and $55.7 billion on behalf of insurance general accounts,[2] we strive to understand your distinct capital requirements, accounting tax treatment, and risk factors.

Invesco Advisers, Inc. and Invesco Senior Secured Management, Inc. are investment advisers that provide investment advisory services to Institutional Investors and do not sell securities. Invesco Distributors, Inc. is the distributor for Invesco's retail products. Invesco Advisers, Inc., Invesco Senior Secured Management, Inc. and Invesco Distributors, Inc. are indirect wholly owned subsidiaries of Invesco Ltd.

1 Invesco Ltd. AUM of $1,585.3 billion USD as of December 31, 2023

2  As of June 30, 2023

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