## figure1-9

## Source details

**Canonical URL:** [figure1-9](https://www.imf.org/-/media/files/publications/gfsr/2018/april/ch1/pdf/figure1-9.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/gfsr/2018/april/ch1/pdf/figure1-9.pdf.md)
- [Structured JSON version](/-/media/files/publications/gfsr/2018/april/ch1/pdf/figure1-9.pdf.json)

---

### Overview
- Title shown: Figure 1.9. Leveraged Loan Issuance, Quality, and Developments after Regulatory Guidance
- Main takeaways presented in the figure:
  - Loan issuance reached record highs in 2017.
  - Covenant protections have weakened over time ...... leading to potentially lower recovery rates in the next default cycle.
  - Highly leveraged loan deals have increasingly been arranged by nonbank lenders ...
  - ... while adjustments to earnings expectations have led to less conservative leverage calculations.
  - ... with the share of proceeds used to fund acquisitions and shareholder enhancements still large.

### Key statistics and chart annotations
- Percent/axis ticks and numeric labels visible in the figure:
  - Vertical tick sequences: 0 10 20 30 40 50 60 70 80 90 100
  - Year/period sequences visible: 20050709111315 17 20 30 40 50 60 70 80 90 100 200304050607080910111213141516 0 10 20 30 40 50 60 70 80 2.0 2.5 3.0 3.5 4.0 4.5 200708091011121314151617 0 100 200 300 400 500 600 700 800 900 199820000204060810121416 20010305070911131517 0 5 10 15 20 25 30 2005060708091011121314151617
  - Additional vertical tick sequence shown: 0 10 20 30 40 50
- Explicit averages highlighted:
  - 69% average
  - 82% average

### Panels and measures summarized
- Panel 1: New Issue Global Leveraged Loan Volume
  - Unit indicated: (Billions of US dollars)
- Panel 2: Global Leveraged Loan Issuance by Use of Proceeds
  - Unit indicated: (Percent)
  - Uses listed: Mergers and acquisitions; Leveraged buyouts; Dividends and buybacks; Refinancing; Other
- Panel 3: New Issue Covenant-Lite US Leveraged Loans and Covenant Quality Index
  - Notes: Moody’s Loan Covenant Quality Index score is a yearly average; data are unavailable from 2008 to 2010 due to lack of rated leveraged loan issuance.
  - Interpretation: Covenant-lite percent of new issuance (left scale); Moody’s loan covenant quality index score (right scale)
  - Label: Higher scores equal weaker covenants
- Panel 4: Average Annual First Lien US Loan Implied Recovery Rates
  - Unit indicated: (Percent)
  - Note: In panel 4, implied recovery rates are based on loan prices one month after default.
- Panel 5: Fraction of US Deals with a Nonbank Entity as Lead Agent
  - Unit indicated: (Percent)
  - Observation in figure caption: Highly leveraged loan deals have increasingly been arranged by nonbank lenders.
- Panel 6: Percent of US Deals with EBITDA Adjustments
  - Label: 6. Percent of US Deals with EBITDA Adjustments

### Interpretations and linkages shown
- Relationship statements drawn in the figure:
  - Covenant protections have weakened over time, which could lead to potentially lower recovery rates in the next default cycle.
  - Adjustments to earnings expectations (EBITDA adjustments) have led to less conservative leverage calculations.
  - The share of proceeds used to fund acquisitions and shareholder enhancements remains large.
  - US issuers and Non-US issuers are distinguished in issuance charts.
  - All loan issuance and All deals lines are presented alongside a line for deals Greater than six times total leverage.

### Sources and notes displayed in the figure
- Sources: Barclay’s; Moody’s Default and Recovery database; Standard & Poor’s Leveraged Commentary and Data; and IMF staff calculations.
- Notes: EBITDA = earnings before interest, taxes, depreciation, and amortization.

*Figure content extracted from figure1-9 (PDF).*

---


_Source: https://www.imf.org/-/media/files/publications/gfsr/2018/april/ch1/pdf/figure1-9.pdf_