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Pricing on junior mezzanine notes is diverging as managers have to cope with difficult conditions
Manager extends non-call by a year, tapping into market for shorter-dated deals
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Defaults among borrowers with speculative grade ratings are set to dive at the start of next year, but only for a while, Moody’s said in an outlook report for non-financial corporates this week. -
Investors in European leveraged debt seem to be giving up for the year. Funds and financial vehicles that buy high yield bonds and leveraged loans have seen large volumes of cash outflows, leaving borrowers with no other option but to step back this week.
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Senior credit analysts at Moody’s are warning that the private equity-led proliferation of weak creditor protections in the leveraged loan market may mean a more protracted and challenging default cycle in coming years.
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Nomura has hired Florian Bita as the head of CLO origination and syndication for the Americas.
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Moody's expects the supply of euro CLOs in 2019 to match 2018 levels, constrained by leveraged loan issuance, with no near term performance worries. However, the rating agency expects that collateral quality and transaction structures will weaken and notes that the European Central Bank’s guidelines to limit excessive leverage have had little impact.
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The €400m CLO deal, managed by Barings (UK) Limited, is set to price on Friday with spread talk on lower rated tranches indicative of a widening in CLO liability costs potentially pinching equity returns. Meanwhile, Magnetar Capital’s First Citizen Finance is marketing its second auto ABS deal backed by Irish loans.
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Wells Fargo analysts said that the biggest risk for CLOs next year is loan rating downgrades straining the structures, although the bank does not expect an increase in loan defaults despite the rise of late cycle lending behaviour.
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Investment adviser Alexandria Capital is teaming up with credit firm and CLO investor Eagle Point Credit Management to bring CLO investing opportunities to more family offices and high net worth individuals.
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The Special Situations Group at Goldman Sachs has structured private financing vehicles based in Luxembourg, which package up bundles of loans made by the group with an average rating of B/B-. The vehicle will also hold risk retention interests for Goldman-sponsored securitizations.
