Loan repricing accelerates but can CLOs keep up?

By Owen Sanderson, Tom Brown
16 Jan 2020

Some of the largest issuers in the leveraged finance universe are repricing their loans, cutting 50bp or more from their margins on the back of strong market conditions and proven performance since the loans were raised. That is putting pressure on CLO managers and equity holders, whose liabilities are tightening too, but more slowly, blocking repricing of the bonds and squeezing returns, write Owen Sanderson and Tom Brown.

Nouryon and Refinitiv were the biggest LBOs of 2018, and sit among the top holdings for CLOs of the post-crisis era. A study from Moody’s showed these names in 223 and 187 European CLO 2.0 issues, respectively, with only 14 companies forming larger holdings.

Refinitiv repriced its euro ...

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