The US Senior Loan Market in 1Q2023

Loan mutual funds and ETFs recorded eight consecutive months of outflows through March. The US broadly syndicated loan market has experienced consistent outflows and weak issuance over the last three quarters, resulting in the first decrease in outstanding loans since 2008. While inflation has moderated, it remains elevated. Loans may struggle to pass along cost inflation to customers, which could negatively impact companies' earnings and leverage ratios. Economic growth may slow, increasing the likelihood of downgrades and defaults.