Latest news
Latest news
Bold cuts to capital charges across deals with CMBS and CLOs set to benefit
Technicals keep triple-A spreads attractive
◆ Issuance abounds despite Iran-Israel escalation ◆ European securitization regulatory proposals unveiled ◆ A digital first for sovereign bonds
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So far, despite the constant market chatter, consolidation among CLO managers has yet to occur. Instead, new firms are popping up as buyer demand rises in the hunt for yield. That has included Sancus Capital Management, which arranged its first deal recently having spent eight years as an investor in CLO equity and mezzanine paper. -
Spreads on triple-A rated CLO resets in euros are widening after heavy supply in the first half of 2021, with senior spreads on new issue CLOs hovering in the mid-90bp area.
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Orchard Global Asset Management has hired Rachit Prasad as a portfolio manager for its CLO team. Prasad will join after an 11 year stint as an ABS research analyst at Deutsche Bank.
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More managers are taking advantages of tighter spreads to refinance or reset older CLOs. Carlyle and KKR have lowered the liability costs of deals issued, respectively, in 2017 and 2019. As the cashflow distributions in July begin, the market will receive another infusion of deals as some CLOs, based on their indentures, are callable on their payment dates.
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Medalist Partners has accelerated the purchase of the remainder of CLO platform Medalist Corporate Finance, formerly known JMP Credit Advisors, given investors' hunger for the product. The firm is set to launch its first ESG CLO in October.
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Positive momentum on liability spreads and attractive equity arbitrage are driving a boom in new CLO warehouse formation, with banks competing to offer better conditions. With perhaps 200 facilities active, the blistering pace of CLO formation is set to continue later in the year.
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Diameter Capital Partners has priced its debut CLO after $250m seed funding from alternative asset managers Apollo Global Management and Corbin Capital, and the pension fund of renewable energy company Babcock & Wilcox. Despite being active in the bond-loan deals, this is the first traditional CLO priced by Diameter, making the firm a new entrance in the regular broadly syndicated loan CLO market.
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After one of the busiest quarters for ABS since the financial crisis, many market participants are eyeing a short break in August in anticipation of a slower market. The combination of working-from-home culture, lack of travel opportunities and physical meetings has prevented many in the market from taking a break.
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Third-party equity investors have come back to the US CLO market supporting the heavy issuance that sources believe will continue over the summer.
