U.S. leveraged loan prices have surged to their highest levels since 2007 as investors snap up assets that will offer compensation while central banks start hiking interest rates, Reuters reported. The U.S. Federal Reserve is expected to deliver a rate hike as soon as March to combat inflation at a 40-year high and markets are pricing in another three hikes by the end of the year. That has heightened demand for assets that pay out as rates rise, sending the price of the S&P/LSTA Leveraged Loan Index to its highest levels since July 2007 at 99.066 at Wednesday's close, according to data from Refinitiv and S&P Global's Leveraged Commentary and Data. Loan funds saw the highest inflows since 2013 at $1.84 billion for the week ending on January 12, according to Refinitiv Lipper data. Government bond prices have tumbled and yields have surged over the last month as markets have ramped up rate hike bets. Analysts also expect new leveraged loan issuance to slow slightly this year after a record year in 2021, a factor also expected to provide technical support to prices.
