CLOs

BlueMountain Capital Management is readying a "print and sprint" CLO, joining a handful of managers that have opted for a speedier deal execution in the Covid era.

The months since the coronavirus outbreak have been a difficult period for the CLO market, as waves of loan downgrades and corporate bankruptcies create a turbulent environment for mangers to steer their deals through. Since March, the CLO space has seen various strategies employed by both managers and investors to mitigate the effects of the crisis. The pandemic has been a period of distress, but could also be a chance for players in the market to differentiate themselves and stand out, according to Allison Salas, CLO research analyst at DWS Investment Management. Salas spoke with GlobalCapital’s Max Adams on the evolution of CLO documentation, manager strategies and the implications of the Covid-19 outbreak for Libor transition.

June opened up with another wave of negative rating actions for CLOs, with $5.7bn of the bonds placed on review for possible downgrades by Moody's, driving concerns that managers could see their ability to trade loans restricted if downgrades pile up.

Despite warehouse lines that have time to run, the rally in leveraged loan markets is forcing CLO managers and equity holders to push ahead with deals, in case they are left buying assets at prices close to par with vehicles far more expensive than before the coronavirus hit.

BlueBay Asset Management, the London-based fixed income and alternative asset manager, has taken on the US CLO management business of its parent company Royal Bank of Canada.

The many challenges that come with steering CLOs through an unprecedented crisis is paving the way for a new era of legal disputes among players in the sector.

CBAM Partners is the first manager to price a debut CLO in Europe since the Covid-19 pandemic began but market participants are worried about the lack of new warehouses opening, forecasting a drought ahead after the pre-crisis deals are termed out.

CVC Credit Partners and Spire Partners have announced new European CLOs, CVC Cordatus Loan Fund XVII and Aurium CLO VI, as the European market slowly gets back to normal.

Shearman & Sterling has hired Mark Chorazak as partner in its global financial institutions advisory and financial regulatory practice in New York.