BA/ML analysts said on US loans that........>

US VIEW: BA/ML analysts said on US loans that September was "all about the three

Ps: politics, petroleum and primary market. Tax reform rose to the forefront,

driving risk assets." 

- They said "loans returned 38bps vs 88bps in High-Yield. Oil gained 10% lifting

the loan Oil & Gas sector to a 2.3% return." The market "saw $55bn of new

supply, the largest since Jan, pushing technicals into negative territory. We

expect another $65bn in Q4."

- LCD index loans finished September "with 38bps of total return behind HY's

88bps, as the release of" a GOP "tax-reform proposal" kept "hopes of economic

reform alive, and helped drive risk assets through another leg of the rally. In

the backdrop of stable macro and oil prices, the mkt took the tax news well:

equities have rallied 1.9% while HY bond spreads have tightened 8bp in the wk

following the news. Loans also tightened marginally despite a heavy

institutional calendar which saw $55bn of new supply come to the mkt."

- They expect "about $65bn of net new issuance in Q4 2017," off 30% vs. "rapid

pace of Q3, owing largely due to the political volatility we expect in Q4."