In both ABS and CLOs, there are signs of possible investor fatigue, or perhaps a slight knock-on effect from recent volatility in equity markets.
In this week’s podcast, Tom Hall discusses how the sterling ABS market is showing signs of getting back on track after a wobble in recent weeks.
In CLOs, triple-A buyers remain stoical, with the most senior tranches continuing to be priced around 130bp, but there have been some signs of widening further down the capital structure.
Opportunistic investors predominate in those tranches, so although the widening already looks likely to be reversed, it could be repeated in the months to come.
Zooming out, a bit of investor fatigue wouldn’t be surprising at this time of year, particularly after a heavy run of supply and more on the way.
Indeed, Afme’s third quarter European securitization data snapshot, published on Monday, showed that, so far this year, issuance is ahead of the post-crisis record set in 2024, with €16.4bn of CLOs issued in the third quarter alone.