Up-front fees for institutional tranches bounced up in September as the trend of deals with original issue discounts continued. September's three-month rolling average showed the biggest increase in fees (those commited at the lowest tier) to 9.7 basis points while October dipped a bit to 8.1 basis points and November shot up again to 11.5 basis points. These levels represent the average retail and institutional up-front fees for each million commited to acquisition related highly leverage loans for a rolling three-month average
Marc Auerbach, analyst at Portfolio Management Data, explained the research entity decided to include the original issue discounts into the data beginning in September so that the up-front fee information would reflect a now well-established market trend. "Now they're becoming more and more a part of the market," said Auerbach, regarding the use of original issue discounts as disguised up-front fees. "Twenty basis points [upfront fee] can now go up to 200 basis points with an original issue discount." Auerbach explained the dip in institutional fees in October to an increased number of loans in the market, decreasing the influence of OID deals on the fee averages. Fees on pro rata remained steady as the market has not seen much activity
