Euro CLO docs to weaken in 2019, warns Moody’s

CLOs
By Asad Ali
29 Nov 2018

Moody's expects the supply of euro CLOs in 2019 to match 2018 levels, constrained by leveraged loan issuance, with no near term performance worries. However, the rating agency expects that collateral quality and transaction structures will weaken and notes that the European Central Bank’s guidelines to limit excessive leverage have had little impact.

Although loan defaults — the key driver of CLO performance — are likely to remain low, settling at around 2% at the end of third quarter of 2019, EMEA speculative credit quality has been on a downward slide. Ratings in the B2 to B3 range are currently at ...

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