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Resets and refis prominent in pipeline as loan market softens, offering respite from repricing wave
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
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Regional banks under pressure to make their CLO holdings comply with the Volcker rule by waiving their right to remove the CLO manager may have been saved in the nick of time. A group of large bank investors in CLOs is understood to be preparing a set of standardised supplementary indentures to make legacy deals Volcker-compliant. -
Most of the time, it’s much easier to deal with new leverage than getting rid of old leverage. That’s something the US CLO market would do well to remember with lead managers said to be placing new CLOs with hedge funds that are taking down senior tranches, provided they can do so, up to 9x levered, making the 150bp spreads on offer look a bit more exciting.
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Hedge funds are starting to use aggressive leverage to make an unexpected move into triple-A CLO tranches, writes Will Caiger-Smith. Some players see this buying, which is not yet widespread, as a bid by bank arrangers to boost the product’s investor base, but others report growing real money demand in any case.
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Lowenstein Sandler has hired a lawyer from Seward & Kissel to join its mortgage and structured finance practice group in New York.
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The US CLO market is becoming more open to innovation in investment strategies and deal structures, as strong demand for refinanced deals inspires shorter-dated new transactions and investors search for value by looking further down the capital stack or leveraging triple-A paper.
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The CLO market is ready for more supply and ripe for innovation, but that optimism is tempered by threats of a liquidity crunch in non-Volcker-compliant triple-A paper. The market is hoping for a deal on legacy CLOs to stop a trading freeze, but if that doesn't happen, it needs to wake up to two uncomfortable truths.
