Latest news
Latest news
Lower pricing across CLO capital structure does little to improve equity arbitrage
Manager tightens triple-A pricing by 27bp and avoids refinancing some junior mezzanine notes
Spread on triple-A rated notes 4bp wide of recent tights
More articles
More articles
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The US high yield market has snapped back after softening in February and March, with recent deals issued at steep discounts bouncing back in the secondary market as retail funds flocking back to the sector chase scarce paper. -
A recent spike in three month Libor has prompted US loan borrowers to switch to the cheaper one month Libor rate, causing a mismatch between CLO assets and liabilities that is putting a new strain on the arbitrage in the structures.
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The bullish sentiment around the European CLO market was on full display this week at the IMN Investors’ Conference on European CLOs and Leveraged Loans in London, with expectations of higher issuance, more investors and US managers seeking more opportunities to issue on the continent.
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Life insurance providers maintained their holdings of securitized products at a steady level last year, but many have rejigged portfolios to target higher yielding, riskier asset classes, a report from Wells Fargo said on Wednesday.
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PGIM Fixed Income announced on Thursday that its co-head of US CLOs would become the firm’s new head of US bank loan portfolio management, upon the retirement of Joe Lemanowicz later this year.
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US fund manager Alexandria Capital is preparing to launch a fund that will invest in alternative assets including CLO equity on behalf of its private wealth and family office clients.
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European CLO spreads have widened following a five week tightening rally, leading to some backtracking of bullish sentiment from triple-A investors at the start of the second quarter, according to a JP Morgan investor survey.
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The second quarter may be slower to pick up for European CLOs, as demand from several big investors softens following three months of brisk issuance.
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Unlike most sectors of US corporate credit, leveraged loans have escaped the volatility of the last couple of weeks. Even a slight cooling in collateralised loan obligations, the market’s biggest investor base, is unlikely to throw this corner of US credit off course just yet, writes David Bell.
