Risk retention could halt CLO issuance 'overnight' but benefit investors

CLOs
By Will Caiger-Smith
11 Sep 2014

Upcoming risk-retention rules for securitization in the US could lead CLO issuance, which hit almost $80bn this week, to grind to a halt almost overnight, according to several market participants who took part in a roundtable organised by GlobalCapital this week.

But a drastic drop in new supply might also create opportunities for investors, they said, pointing out that CLO spreads would rally and widening loan spreads would allow equity holders to add value.

Several recent deals — including a post-crisis debut from middle-market lender Monroe Capital — ...

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