September has proved a busy month for the European securitization market. On this week's episode of Another Fine Mezz, Sarah Ainsworth is joined by Tom Hall and Thomas Hopkins.
It is the first time all three hosts have recorded together and the team looks back on GlobalCapital's live event on data centre ABS and also TwentyFour Asset Management's conference.
Tom reports on yet another week of heavy ABS issuance. Most of the recent deals attracted strong order books, but spreads have stopped tightening. In UK prime RMBS, investors have made clear they will not buy paper in the high 40s when UK buy-to-let deals with STS labels offer spreads in the 80s.
UK mezzanine notes, by contrast, are still being priced tight. The picture in euros is less clear with some senior notes being priced wider than last September.
Thomas turns to the CLO market where new issuance has picked up and managers have fresh leveraged loan supply to look forward to at last.
Some analysts expect €25bn to €30bn of new loans, with up to 80% of it new money for buyouts. Those loans are expected to pay spreads in the mid-300s, compared with the low 300s on recent repricings, which should lift portfolio spreads.
However, Thomas's sources warn that the benefit may be modest. CLO mezzanine spreads are already very tight, and around 140 open warehouses could ramp quickly and push loan prices back up to par.
Listen to the podcast, here
