Latest news
Latest news
Demand is expected to come from Europe, LATAM and Asia
Heavy supply continues to weigh on spread tightening
Bold cuts to capital charges across deals with CMBS and CLOs set to benefit
More articles
More articles
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CLO managers once happily sold huge volumes of triple-A securities to NorinChukin, sucking up the Japanese bank’s terms in return for a reliable anchor order which locked in their senior notes ahead of public syndication. The bank has been slowly running down its portfolio since it was forced to stop buying by its regulator, but if it comes back, it might find managers keen to preserve their flexibility and place their bonds elsewhere. -
Alongside the rush of refi and reset activity, a third form of CLO refinancing is once again emerging, with Canyon Capital choosing to reissue a 2015 CLO as a new $420m deal called Canyon CLO 2021-2.
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Head of US CLO new issue syndication David Ryan has left Deutsche Bank after 17 years working at the bank.
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A growing number of pension funds are turning their attention to the riskier part of the CLO capital stack in search of extra yields, attracted by the risk-adjusted returns offered by CLO equity and mezz, compared with other fixed income asset classes.
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Record levels of resets in the CLO market on both sides of the Atlantic are helping NorinChukin Bank, once the anchor investor for many triple-A tranches, slim down its investment portfolio in the asset class. Fortunately, new big buyers are stepping up at the top of the capital structure, and on less onerous terms than NoChu demanded.
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CLOs have 'by nature' a limited exposure to the industries commonly excluded under ESG criteria, meaning their investment flexibility will be preserved, despite the exclusions appearing in more and more deal documents. This bodes well for the growth of ESG screening in the US CLO market, which has lagged behind other markets, with only 10 deals so far featuring the language, according to Deutsche Bank.
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The State of Michigan Retirement System has recently disclosed a new commitment to a CLO fund, signaling that more pension funds are turning their attention to the CLO market, attracted by its fast recovery.
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When hot new debt products are on the march, someone will always push the boundaries beyond what is tolerable. In the case of recurring revenue loans, that would be a mistake.
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Three recent CLO issues have underlined the size of the US bank buyer base in triple-A rated tranches, structuring loan note tranches of more than €150m — a format favoured in particular by Bank of America and State Street for their investments, but which could further constrain liquidity at the top of the capital stack.
