Secondary trading volume increased 20% to $68.6 billion in the second quarter, from $57.4 billion in the first quarter, according to the Loan Syndications and Trading Association's second quarter trade data study. Trade data was collected on 62%, or 917, of the 1,485 U.S. borrowers priced by the LSTA/LPC Mark-to-Market Pricing Service, and 89% (612) of the 690 U.S. borrowers tracked by the S&P/LSTA Leveraged Loan Index.
The number of trades in the second quarter also increased, rising 28% to 35,187, compared with 27,534 in the first quarter of 2006. Meanwhile, the mean trade size decreased 10% to $1.9 million, from $2.1 million in the first quarter. Trade frequency rose; the number of facilities trading more than 20 times increased to 31% in the second quarter, from 25% in the first quarter. But the number of facilities trading one to four times fell to 35%, from 37%.
Unrated facilities also declined. The number of unrated facilities dropped in the second quarter to 20%, from 27% in the first quarter. This is the lowest percentage on record, according to the study. The percentage of facilities trading with a BB- rating increased to 35%, compared with 31% in the first quarter, while single B rated facilities increased to 38%, from 35%. This also represents the highest percentage on record. Trading in CCC+ facilities or below remained flat at 7%.
In the second quarter, term loan trading represented 79% of secondary volume at $54.1 billion. Second-lien trading represented 13% or $8.7 billion and revolver trading represented 8% or $5.7 billion. Par trading represented 92% of secondary trading volume with $63.1 billion, while distressed trading represented 8% or $5.5 billion.