On the Blotter: June characterized by selloffs and price pressure in anticipation of 2028 maturity wall

June saw more new-money supply from M&A and LBO financings in the market^{1, 2,3}, continued CLO ramp activity as well as a more selective tone across liquidity buckets⁴. For a second consecutive month, lower liquidity names (Octaura Liquidity Score 4) were the best performers by price on Octaura. In this piece we will dig into the pending 2028 loan maturity wall, which is highlighted this month with increased selling activity across select names and corresponding price weakness.

With an estimate $161BN of facilities maturing in 2028⁵, there is growing concern around the ability of those companies to manage the near-term maturity.  While almost half of the 2028 maturities have extended over the last quarter, we believe the balance of the facilities remaining provides a near-term risk for the market.  On the platform, we analyzed how trading activity might have been affected by the anticipation of these names maturing. The balance of facilities by definition have left a negative selection bias and observably, of the Octaura Universe maturing in 2028 – we saw an average price decrease of $.92 or 1.47% from June 1^st– June 23^rd, indicating a notable amount of downward price pressure, compared to the 2032 names, which saw an average price decrease of $.48 or .49%. Using 2032 maturities as a control group, we compared buy/sell skew across the two cohorts and found heavier selling by percentage in 2028 names, while the percentage of buying for the longer-dated 2032 names was elevated over the course of June.

The above chart shows that more than 3 in every 4 loans in the 2028 cohort were sold in the month of June; a sizeable difference in the loans being sold in the cohort of 2032s.

Separate from the 2028 selloff, a general theme we saw across the universe of loans traded on Octaura was a dispersion across liquidity buckets. Lower-liquidity names outperformed, with loans scored by Octaura Liquidity Score (OLS) 4 leading both week-over-week (+18c) and day-over-day (+32c) moves as of June 22. This occurred while the most liquid cohorts lagged, with OLS 10+ and OLS 10 both down 8c and OLS 9 down 6c. That divergence, alongside the month-over-month decline in the Highly Liquid Tracker showcased an interesting shift in demand for lower liquid names over highly liquid names.

M&A and LBO-related financings added new loans to the market, including activity tied to Network Connex¹, ESCO Technologies², QXO’s acquisition of TopBuild³ and Pathfinder Power. After a stretch where repricings dominated much of the conversation last month, we believe that kind of new-money activity gave CLO managers and other loan buyers more supply in the market to work with. CLO demand remained an important part of the backdrop on the platform; throughout the month Octaura saw increased CLO activity as clients executed across CLO ramps, CLO liquidations and two-way fund flows.

Based on our observations this month, Octaura saw a few salient themes across June – increased CLO activity on the platform, increased selling activity for names ahead of the 2028 maturity wave, and an uptick in price and demand for lower liquidity names, all underscored the notion that the market is active, but moves are nuanced.

1. Olympus Strikes Deal for Majority Stake in Network Connex
2. Esco Technologies signs new credit agreement for USD 500 million revolving facility, USD 500 million term loan A
3. QXO Nets $3.5B in Post-Launch Private Placement – Modern Distribution Management
4. Octaura defines liquidity buckets using Octaura Liquidity Score (OLS) across the following cohorts:
   1. Highly Liquid (OLS 10-10+)
   1. Liquid (OLS 8-10)
   1. Moderately Liquid (OLS 4-7)
5. This estimate is based on internal calculations and assumptions.

All market prices, data and other information (including that which may be derived from third party sources believed to be reliable) are provided “AS-IS” and are not represented or warranted, expressed or implied, as to completeness, accuracy, or fitness for a particular purpose and are subject to change without notice. Octaura disclaims any responsibility or liability to the fullest extent permitted by applicable law, whether in contract, tort (including, without limitation, negligence), equity or otherwise, for any loss or damage arising from any reliance on or the use of this material in any way. The information contained herein is as of the date and time referenced only, and Octaura does not undertake any obligation to update such information.

Methodology Note: Unless otherwise indicated, references to trackers, liquidity buckets, flow data and execution metrics are based, in part, on Octaura internal data and proprietary classifications for the periods specified. Such data is limited to the instruments, counterparties and activity captured on the platform and may not be representative of the overall leveraged loan market. References to specific issuers or transactions are provided solely as illustrative examples of market activity and do not constitute recommendations or endorsements.

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