Latest news
Latest news
State of New Hampshire's innovative bond gets Ba2 rating
Falling leveraged loan prices promise tantalising returns, but the risk of defaults is rising
Some managers are choosing loans conservatively to avoid losses, but they will struggle to improve returns
More articles
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Credit insurers are said to be dipping into CLO equity risk — not as cash investors allocating to alternative managers, but through directly insuring retention notes. This comes against a backdrop of more interest from insurers in junior corporate risk through the SRT market.
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Spreads on triple-A notes have once again begun to tighten, following a pause while the market digested the heavy flow of new supply. Market participants expect further tightening could follow from June. -
Investor appetite for triple-B CLO notes has been a powerful lever encouraging managers to tweak regular CLO structures to boost the size of this tranche and diverting excess spread to shore up the rating. Colloquially known as ‘Kroll deals’, from the rating agency that rates these issues, some managers have structured tranches as large as $100m to satisfy insurers’ quest for yield. But the structure relies in part on sourcing loans at low prices.
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UK small business lender SME Capital could bring one of the first true SME CLO deals in Europe to market, once it builds up a large enough pool of collateral. The lender has just announced a funding deal with structured credit funds Prytania and Scio Capital, which will allow it to expand its lending capacity and build towards a full sized portfolio.
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Covid-era deals looking for cheaper liability stacks are beginning to flood the market with refi and reset transactions, as they hit the end of their one year non-calls. Canyon Capital has reset and increased the size of Canyon CLO 2020-1, cutting 74bp off the margin of a senior tranche originally priced in May 2020.
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More managers are eyeing the rare US CLO structure which combines both leveraged loans and high yield bonds, in search of more flexibility, and to capitalize on the mispricing between the high yield and leveraged loan markets.
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Apollo subsidiary Redding Ridge has boosted its CLO platform, hiring Patrick McCarthy from JP Morgan, and Andrew Croshaw from law firm Cadwalader.
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New issue CLOs are increasingly selling equity to multiple buyers, leaving no single investor with a majority position — signalling an end to the difficulties of last year, which saw managers without their own equity or committed partners struggle to come to market.
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WhiteStar Asset Management’s expansion into London could include the purchase of an existing CLO platform, according to chief executive Gibran Mahmud. The Texas-based firm, run by the former Highland Capital Management team, announced last week that it had opened a London office headed by executive chairman Gordon Neilly.
