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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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CLO industry participants are losing hope for a regulatory or legislative fix to ease the Volcker rule’s impact on banks investors, especially after the Federal Reserve confirmed that its two year extension for banks to make their deals compliant would not apply if those securities change hands. -
Restrictions on covenant-lite loan buckets have become commonplace in European CLOs this year amid a trend of increasing deal sizes, just as some market participants have begun to fret about riskier asset selection.
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European CLO managers and investors believe underwriting standards in Europe’s leveraged loan market are weaker now than before the 2008 financial crisis, but that with limited primary activity in the leveraged buyout market cov-lite loans are still not a “major issue” in Europe.
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CLO managers may be more inclined to amend existing deals to make them comply with the Volcker Rule now that the US Federal Reserve has given bank investors an extra two years to make sure their CLO holdings conform. But that doesn’t make it any easier to do in practice, CLO market participants have told GlobalCapital. And the potential changes could put too much pressure on equity investors.
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CLO managers may be more inclined to amend existing deals to make them Volcker-compliant now that the Federal Reserve has given bank investors an extra two years to make sure their CLO holdings conform. But that doesn’t make it any easier to do in practice, and the potential changes could put too much pressure on equity investors, CLO market participants told GlobalCapital on Monday.
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The declining arbitrage levels in the European broadly syndicated loan CLO market are not leading managers to change their approach to asset selection, Moody’s analysts told GlobalCapital this week.
