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US Securitization Awards: CLO Arranging Bank and Trading Desk of the Year – Morgan Stanley

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A top performance supported by deep client relationships, first class pipeline management, and a touch of creative thinking

An explosion in CLO activity across new issuance, refinancings and resets in 2021 forced banks to use every tool at their disposal to ensure successful execution. In an extraordinary year, Morgan Stanley’s deep client relationships, pipeline management and creative thinking shone through.

The bank’s ability to leverage expertise across arranging, syndication and trading resulted in a quartet of awards, which exemplifies the unrivalled breadth and depth of the firm’s power in the CLO space.

Prioritising quality of execution and delivering the utmost value to our clients is a key part of providing first class service
Rachel Russell, head of global CLO new issue
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 “As a preeminent full-service, global investment bank, we deliver the best of Morgan Stanley to all of our clients,” says Rachel Russell, head of global CLO new issue. The firm leads with expertise in CLO banking and distribution, while leveraging its presence as a market leader in secondary trading across corporate credit and securitized products.

“It’s a powerful combination,” says Russell. “It allows us to consistently provide the best advice and execution to our clients across both assets and liabilities, which is critical to successful CLO formation.”

With offices throughout the US, Europe, Asia and other key global locations, Morgan Stanley places great weight on helping its CLO manager clients to develop and expand their investor base globally. This commitment has forged trusted, long-standing relationships with CLO investor clients and the bank continues to work tirelessly to introduce them to managers and opportunities that fit their investing needs.

Last year also saw the CLO team partner closely with the bank’s thought-leading global sustainable finance group to help CarVal price their inaugural pair of CLOs incorporating CarVal’s proprietary ESG investment strategy. “This was truly collaboration, client partnership and innovation at its finest,” said Russell.

No other bank was as well placed to step up to the record volumes of 2021. Over the past 10 years, Morgan Stanley has successfully arranged close to 500 CLO transactions across the US and Europe. The firm has partnered with 100 CLO managers globally – a testament to the strength of its client franchise.

In 2021, the bank successfully introduced a number of new debt and equity investors to the platforms of its established and newer CLO manager clients. “We helped CLO investors diversify their holdings and successfully advised new CLO managers on building their business and entering the market,” says Russell. “Prioritising quality of execution and delivering the utmost value to our clients is a key part of providing first class service.”

We have spent the last five years growing our presence in the middle market lending and securitization space, developing new business and deepening relationships with existing partners like BlackRock
Kylie Duff, head of US CLO new issue
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The Palmer Square CLO 2021-1 was a fine example of superior execution. With an eye towards expanding Palmer Square’s investor base internationally, Morgan Stanley designed a tailored marketing strategy focused on Japan. They developed a global investor book with Japanese participation in the senior tranches, along with a number of new investors across debt and equity. The strong distribution, along with Palmer Square’s acumen for constructing portfolios and acquiring assets, allowed the bank to thoughtfully upsize the transaction by 20%.

Morgan Stanley was structuring lead on BlackRock’s DLF-VIII-L CLO – winner of GlobalCapital’s Middle Market CLO Deal of the Year. “We have spent the last five years growing our presence in the middle market lending and securitization space, developing new business and deepening relationships with existing partners like BlackRock,” says Kylie Duff, head of US CLO new issue. “The issuer has a leading direct lending franchise and were looking for a creative solution from us, which we delivered.”

In the trading space, Morgan Stanley evolved into the leading CLO franchise during the depths of the pandemic. “The business puts clients first by committing to provide two-sided liquidity across the entire CLO product suite and managing risk in order to stay relevant in any market environment,” says Jake Pruner, head of US CLO trading.

Morgan Stanley has consistently captured a market share of 14% for each of the past five years and has the second highest client wallet share since the start of the pandemic. In 2021, the bank set a record for any dealer in a single year by trading CLO equity with 94 unique counterparties. The trading desk leads the CLO & leveraged loan market in content, providing market standard CLO commentary, numerous investor day and conference speaking engagements, and top ranks in buy-side surveys of CLO trading desks.

“We’re grateful to the market for the honour of winning across the four categories,” says Russell. “It’s a testament to our long-standing commitment to excellence across all segments of the CLO market, and above all, to our clients.”

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