In another sign that concerns about the U.S. economy and Europe's debt crisis are weighing on the corporate term loan market, the pipeline of loans in process has fallen by half from its high this year, according to Thomson Reuters.
The forward supply has fallen to $11.2 billion, down sharply from $21 billion the first week of July, and close to the low levels seen in March, when the markets were reeling from the Japanese earthquake.
The pipeline did register a $1 billion increase last week, when Emdeon Inc., a health care payments firm, announced it was eyeing a $1.2 billion term loan to finance its buyout by Blackstone.
The market for newly issued loans is essentially stalled, however, as the volatility in broader credit markets exacerbates the normal summer slowdown.
Fragile market conditions are complicating new deals. For example, Immucor Inc., a medical technology company, had to tweak a $515 million term loan last week by increasing pricing and adding protective covenants for the institutional investors that would fund it.
The majority of the loans currently in the pipeline are needed to finance buyouts and are not expected to be actively marketed until after Labor Day.
