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Dasha Sobornova joins from Akin Gump with experience across asset classes
Trade body for levfin investors turns to leading rating analyst
Demand for riskiest tranches and improved loan supply could support growth in issuance
Dana Point 'no longer the end' of the year as market retains momentum
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The District of Columbia Court of Appeals ruled on February 9 that CLO managers should be exempt from risk retention rules, a move that will make the business less capital intensive and could spur an increase in smaller managers. But with loans still trading tight, despite volatility spiking elsewhere in credit markets, finding collateral is still the biggest challenge in the market. -
Morgan Stanley analysts described the potential rollback of risk retention rules for US CLO managers as a “modest positive” for the market on Tuesday, adding $10bn to their 2018 issuance forecast, but they warned that credit quality could suffer in new deals because of the scarcity of leveraged loans.
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First time issuers are dominating activity in the growing market for commercial real estate CLOs, with Bridge Debt Strategies the latest debut real estate investment trust to tap the market.
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Shares in US CLO manager Marble Point’s listed loan fund were admitted to the London Stock Exchange on Tuesday, after the firm successfully closed a $42.5m initial public offering on Friday.
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US high yield bonds have been jittery in recent days but the loan market has largely held firm, with few opportunities for CLO managers to buy assets on the cheap. The riskiest pieces of CLO debt have shown some vulnerability to market pressures, however.
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A ruling last week by a US court exempting CLO managers from risk retention rules should boost supply of US CLOs, though demand may suffer, as regulated European investors will no longer be able to buy into US deals, said bankers. Likewise, European CLO spreads may tighten as the supply of compliant paper dwindles.
