Traders expect to see some pricing pressure on credits in the secondary market as collateralized loan obligations sell positions to make room in their portfolios for new credits. A trader said a lot of CLOs are fully funded and have started to make room for new deals. "Everybody was thinking this might create pricing pressure. We are seeing preliminary signs of this," he said. He cited Ford Motor as an example of a credit that saw pricing pressure when it dipped after breaking in the secondary last week (see story, page 4). "If there are only a few CLOs that will sell to make room it won't be a big deal, but if a lot do it then you could see a lot of pricing pressure," he said.
CLOs Sell To Make Room For New Deals