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Despite unfavourable equity arbitrage, CLO issuance continues at pace
Triple-A rated CLO spreads tighten at last and a template is established for European data centre ABS
Public versus private distinction scrapped for disclosure plus new, simplified templates for mature asset classes
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US CLO deals have been getting larger in recent weeks, with triple-A demand said to be becoming broader as bank investors look to get back into the market — even as regulators appear to be inflexible on banks’ attempts to Volckerise their legacy CLO holdings. Hedge funds continue to look at leveraged triple-A investments, but the market is split on the magnitude of this activity. -
The pipeline of new CLO issuance continues to swell, shrugging off some of the summer malaise afflicting other parts of the capital markets. Although only one broadly syndicated loan CLO was priced this week, some seven deals were marketing as of Thursday afternoon, with triple-A demand described as “robust”.
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The Officer of the Comptroller of the Currency, one of the US federal agencies tasked with implementing the Volcker rule, has reportedly said it will not accept bank investors waiving their right to remove and replace CLO managers as a way of making legacy CLO transactions Volcker-compliant.
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The Officer of the Comptroller of the Currency (OCC), one of the US federal agencies tasked with implementing the Volcker rule, has reportedly said it will not accept bank investors waiving their right to remove and replace collateralised loan obligation (CLO) managers as a way of making legacy CLO transactions Volcker-compliant.
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Cuts to Royal Bank of Scotland’s US non-agency mortgage business may extend to its collateralised loan obligation syndicate and distressed debt businesses, and may also lead to a “rationalisation” of its agency RMBS trading desks, GlobalCapital understands.
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Onex Capital Partners priced its largest ever CLO last Friday, a $1bn deal which was structured to comply with European risk retention rules. The deal is only the third post-crisis US CLO to breach the $1bn mark, and comes as many managers are finding enough demand to upsize their deal, with all but the largest players offering discounts.
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Fair Oaks Income Fund has acquired GLI Finance’s last two CLO investments, as it builds an initial portfolio ahead of the first CLO fund flotation in London since the financial crisis.
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New challengers are entering the CLO arranging market, as deal sizes swell and analysts rewrite their issuance forecasts. Lesser known arrangers like Mitsubishi UFJ are looking to expand their presence, and US managers are broadening their appeal by structuring deals to comply with European regulations. But some market participants are calling for caution as pre-crisis trends re-emerge.
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New challengers are entering the CLO arranging market, as deal sizes swell and analysts rewrite their issuance forecasts. Lesser known arrangers like Mitsubishi UFJ are looking to expand their presence, and US managers are broadening their appeal by structuring deals to comply with European regulations. But some market participants are calling for caution as pre-crisis trends re-emerge.
