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Weekly Market Summary
Sep 21 to Sep 25, 2026
Extra Credit*
•Leveraged loan funds saw renewed investor demand ahead of the Fed’s September rate decision. Loan fund AUM increased by $1.2 billion in August, according to Morningstar data, with inflows continuing into September. The Fed’s 25-basis-point rate increase on Sept. 16, which lifted the overnight funding rate to 3.75%–4.00%, provides additional support for floating-rate loans by raising their baseline interest income.
•Since the end of March, AUM at loan funds has grown by $2.7 billion, to $96 billion. Still, loan funds’ share of the Morningstar LSTA US Leveraged Loan Index has slipped to 6.37%, the lowest since September 2009. This continues a longer-term trend of loan fund AUM declining as a share of the growing universe of syndicated leveraged loans, while CLOs have grown as the dominant investors in the asset class.
•Credit pressure across BDC portfolios continued to broaden in Q2. The number of BDC-held companies showing some degree of stress rose to 583 companies as of June 30, up 8% from March and 25% from year-end 2025.
•Dollar exposure is rising even faster as larger borrowers come under pressure. First-lien term loan and unitranche investments showing signs of stress reached $47 billion, a 92% increase from year-end 2025. The faster growth in exposure relative to borrower count suggests that credit deterioration is increasingly affecting larger, more consequential positions.
Source: Pitchbook
Basis points, otherwise known as bps or "bips," are a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument. The Morningstar LSTA US Leveraged Loan Index is a market-value weighted index designed to measure the performance of the US leveraged loan market. A collateralized loan obligation (CLO) is a single security backed by a pool of loans, collected into a marketable instrument via process known as securitization. A business development company (BDC) is a regulated, closed-end investment vehicle that raises capital from the public to invest in small, mid-sized, or financially distressed private companies.
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*Source: Morningstar®, Bloomberg, Credit Suisse. OAS is Options Adjusted Spread. 4-year discount margin is used for spread for bank loans. Yield quoted is yield-to-worst or equivalent calculation. YTD Low / High for yields are based on end of week and not intraday movements. Indexes and sub-indexes: Investment-grade corporates represented by Bloomberg US Corporate Bond Index. High-yield bonds represented by Bloomberg US Corporate High Yield Index. Bank loans represented by Morningstar LSTA US Leveraged Loan Index. The red and green arrows depicted under Yields, Option Adjusted Spreads, and Prices indicate a higher or lower value from the previous week.
Past performance does not guarantee future results. Index performance is not indicative of fund performance. Indexes are unmanaged and it is not possible to invest directly in an index.
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