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October 11, 2017 
Written by Emer Maloney, Dealogic Research

With leveraged finance volume surpassing full-year 2016 levels, revenues also leap.

Global revenue recovers

Leveraged finance volumes for the US and Europe have already surpassed full-year figures for 2016.* So far this year, volume for both regions stands at $1.10tr, up a staggering 92% since this time last year. LevFin revenue for both regions has mirrored this upward trend but at a slower pace, with YTD figures increasing from $6.9bn in 2016 to $10.5bn in 2017.

The US continues to be the driving force, accounting for a YTD average of 83.4% of LevFin revenue since 2014. However, European revenue has seen a greater recovery—up by 56% from this time last year compared to 51% in the US—after experiencing year-on-year declines of 45% in 2015 YTD and 19% in 2016 YTD.

Loans reign over bonds in leveraged finance fees

Loans account for a majority of LevFin revenue in both the US and Europe. The US market has also seen an increased dependence on loans as a revenue driver. In 2015 YTD, loans accounted for $3.5bn and 52.9% of US LevFin revenue, and that share rose to 68.5% in 2017 YTD. Meanwhile in Europe, bond revenue YTD fell from $1.2bn in 2014 to $344m in 2016. Even as bond revenue recovered in 2017 YTD, loans still accounted for 55.1% of European LevFin fees.

Will 2017 be the new benchmark?

Revenue derived from new money deals in both the US and Europe this YTD has surpassed full-year 2016 figures and is just $407m short of full-year 2015. Despite a falling YTD share of new money from 63.5% in 2015 to 53.1% 2017, year-on-year nominal value has been on the rise. Furthermore, the past 15 quarters have generated an average of $2.8bn in LevFin fees. With only $2.3bn needed to match total LevFin revenue for full-year 2014, this year is lining up to be in pole position.


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Data source: Dealogic, as of October 1, 2017