U.S. loan issuance in 2009 tumbled 28 percent to $547 billion, from $764 billion in 2008, as corporate issuers extended debt maturities by refinancing bank debt with high yield bonds, according to data from Reuters Loan Pricing Corp.
Investment-grade loans fell to $229 billion, down 28 percent from 2008's $319 billion, while leveraged loan issuance slid to $239 billion, down 19 percent from $294 billion in 2008, RLPC reported on Wednesday.
Loan volumes fell as many distressed companies took advantage of improving borrowing costs in the high yield bond market to refinance bank loan debt and stave off potential liquidity crunches.
"Refinancing of both leveraged loans with high yield bonds and straight bond-to-bond takeouts has provided many leveraged issuers with crucial debt extensions," RLPC said in a release.
"The displacement of leveraged loans by high yield bonds is expected to continue into 2010 as most experts believe the rally in the high yield market will thrive so long as interest rates remain low," it said.
JPMorgan was lead arranger for U.S. loans in 2009, with $116 billion, or 21 percent market share, followed by Bank of America, with $111 billion, or 20 percent market share, and Citigroup, with $67 billion, or 12 percent market share.
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