Latest news
Latest news
Major sectors in leveraged loans are trading down, making shrewd credit selection vital
Deal is one of the tightest prints this year and is the second European CLO solely arranged by Mizuho
Debut manager is launching a CLO platform building on leveraged loan market experience
More articles
More articles
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A struggling global economy and a sluggish US recovery has raised the spectre of negative US interest rates, giving CLO investors another item to add to a growing list of concerns in 2016. -
European CLO managers have expressed concern about the state of the European market, despite suggestions the market offers relative value compared to its US counterpart.
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Credit Suisse reported a loss of Sfr6.44bn for the fourth quarter of 2015, as the bank’s restructuring ramped up and it crammed exceptional items into last year’s numbers. Like Deutsche Bank in the third quarter, a chunky goodwill writedown was the main culprit. But the bank also suffered from its exposure to leveraged loans.
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CIFC made headlines last week when it announced that it had engaged JP Morgan to explore “a range of strategic alternatives” to its business model, but rumours of a definitive sale or merger with another manager are premature.
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The US CLO market is looking to Japan and other Asian markets in order to find triple-A buyers as the pool of investors interested in the debt continues to shrink.
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CLO managers and investors may want to look beyond the struggling commodities sector for signs of default risk, as idiosyncratic and one-off defaults in industries such as healthcare and retail will also pressure the CLO market in 2016.
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Mezzanine CLO spreads have widened in the secondary trading as credit markets remain under pressure from the widespread volatility that has characterized the year so far.
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The first US CLO deals of 2016 were priced on Monday, after being held up last week by investor concerns over widespread volatility that wreaked havoc across financial markets.
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The weakening credit quality of exploration and production and oilfield services companies is threatening to take its toll on the US CLO market.
