It is a hot summer for the M&A financing in the U.S. leveraged loan market. Issuance of loans to finance LBOs and other M&A set another record in July at $38.8 billion, just edging the prior peak of $37.5 billion in June, according to LCD.

The surge in July was driven by deals from issuers controlled or being acquired by private equity firms. Sponsored M&A-related volume during the month was $31.9 billion, or 82% of the overall M&A issuance, and that includes new buyouts as well as acquisitions. By comparison, sponsored issuance in June was 61% of the total as nonsponsored borrowers accounted for a larger share at 39%.

A $3.9 billion term loan backing the spinoff of DIRECTV from AT&T Inc. was the largest M&A deal launched during the month. Standard Industries, which is acquiring W. R. Grace & Co., and buyouts of Cloudera Inc. and Parexel all added institutional term loans of more than $2 billion to the total.

Speaking of leveraged buyouts, loans backing those credits are coming at a record clip as well. As LCD has reported, LBO loan issuance during the second quarter saw its fastest pace since 2007, with a focus during the first half of the year on technology companies.

The heavy deal flow has put 2021 M&A issuance through July 31 at $196.7 billion, ahead of any other year since the global financial crisis. That is well ahead of the comparable period in 2018, the prior peak, when $183.3 billion was issued. Again, that is mainly due to private equity-backed issuers. M&A issuance year-to-date from sponsored companies is at an all-time high of $147.6 billion, 12% higher than the prior high in 2018.

For the record, nonsponsored issuance is not at a high but is not far off the pace. With $49.1 billion in the books year-to-date, it is the fourth-highest cumulative volume. The three years ahead of it range between $50.2 billion and $52.1 billion.