CLOs

  • ELLI default rate on negative trend

    The S&P ELLI index rose to 5.3% in March from 4.9% in February, based on par amount outstanding, and is now at its highest level since July 2010. European asset-backed analysts at RBS note that the increase in the default rate was driven by a rise in the absolute volume of ELLI constituents falling into distress (the numerator of the .......

    News Round-up 12 April 2012

  • Fund manager picks president

    William Bohnsack has been promoted to president at Oak Hill Advisors. He has been coo at Oak Hill since 2001 and one of the firm's four senior partners since 2005.

    Bohnsack joined Oak Hill in 1993 and became partner in 1999. During his time at the firm he has worked as a senior professional investing in performing and distressed debt, .......

    Job Swaps 5 April 2012

  • CLO survey highlights regulatory concern

    JPMorgan has published the results of its latest CLO client survey, based on responses from 79 accounts. The results suggest that regulatory reform remains a key concern among market participants.

    Indeed, respondents pointed to risk retention as the most damaging regulation to CLO new issues, noting that the market is still waiting for guidance on risk retention as set out .......

    News Round-up 5 April 2012

  • Key person clauses modified

    The investment management agreements for the Stone Tower Credit Funding I, Stone Tower CDO, II, III, IV, V, VI, VII and Cornerstone CLO transactions have been amended to modify the definition of 'key person'. The amendment adds the names of two Apollo Global Management executives and one Stone Tower Fund Management (STFM) executive, and removes the names of two STFM .......

    News Round-up 2 April 2012

  • Hawker Beechcraft cut hits OC ratios

    The downgrade of Hawker Beechcraft to double-C by S&P will cause some CLO overcollateralisation ratios to decline, securitisation analysts at the agency note. The credit is held by about 75 CLOs, with aggregate exposure of US$200m. It represents 3.6% of the pool in one deal and 1% in nine other CLOs.

    If the company defaults, it would be the largest .......

    News Round-up 30 March 2012

  • SME CLO asset defaults

    The €6m subordinated bond issued by Gruezi, which forms part of the collateral backing PULS CDO 2007-1, has been classified as defaulted. An investor in residential real estate, the company is facing an increasing number of lawsuits from customers intending to reverse their transactions, claiming formal mistakes during the purchasing process. Given the increasing volume of claims, the company is .......

    News Round-up 30 March 2012

  • Kinetic Concepts targeted

    Kinetic Concepts was the most purchased loan by CLOs in 4Q11, according to securitisation analysts at S&P. They suggest that CLOs nearing the end of the reinvestment period likely bid up the short-dated tranche of the loan, which the company issued to target CLOs that have WAL constraints. Additionally, Texas Competitive Electric Holdings and Travelport remained some of the most .......

    News Round-up 29 March 2012

  • BWIC boredom as CLO market stutters

    Excitement generated by the take-off of significant European CLO BWIC activity last month has turned to frustration and indifference. Bid-lists continue to flood the market, with notably large examples both today and yesterday, but trading is patchy.

    "There has been a ton of BWICs, but it is hard to see where the market is. There is just no direction and, .......

    Market Reports 28 March 2012

  • New role for ex-MS ceo

    John Mack has joined Kohlberg Kravis Roberts & Co as senior advisor. He was most recently chairman and ceo at Morgan Stanley and previously held similar posts at Pequot Capital Management and Credit Suisse Group.

    "John Mack is a great leader who we believe will add enormous value to KKR's investors, partners and our portfolio. He will help make us .......

    Job Swaps 28 March 2012

  • RFC issued on leveraged loan guidance

    The US Fed, the FDIC and the OCC are seeking comment on proposed revisions to the interagency leveraged finance guidance issued in 2001. The move could be a modest positive for future CLO loan quality, according to securitisation analysts at S&P.

    The update emphasises the importance of good underwriting and reserving for potential losses and seeks to address concerns about .......

    News Round-up 28 March 2012

  • Successor manager clause amended

    The investment management agreement for Clydesdale Strategic CLO I has been amended to allow under certain circumstances, following a resignation of the investment manager, the appointment of a successor investment manager designated by the resigning manager. The appointment is conditional upon, in addition to other requirements, neither a majority of the subordinated notes nor a majority of the rated notes .......

    News Round-up 27 March 2012

  • CLO reinvestment periods targeted

    A number of corporate issuers appear to be carving out loans compatible with WAL constraints for CLOs nearing the end of reinvestment periods. The proposed US$3.7bn financing backing the Infor and Lawson merger includes a US$400m tranche with 4.5-year maturity tailored for CLOs, according to LCD. Gettyimages, First Data and Kinetic Concepts also recently issued loans targeting CLO participation.

    .......

    News Round-up 23 March 2012

  • Issuing impetus

    Bumper CLO issuance spurring return to market heights, tights

    February saw the largest monthly volume of new CLO issuance since the financial crisis. With plenty of deals remaining in the pipeline, the ability of the market to continue absorbing the supply, as well as the impact of primary issuance on secondary prices and how conservatively the rating agencies approach the new transactions will be key concerns.

    The US$2.54bn issued .......

    News Analysis 22 March 2012

  • Insolvency event for mezz SME CLO

    Chamartín Meermann Immobilien, portfolio company no. 41 in the H.E.A.T. Mezzanine I-2006 SME CLO, has filed for insolvency. However, the insolvency event will not have an immediate effect on the transaction as the principal amount of the SOLA obligation (€4m) will only be recorded to the principal deficiency ledger in case of a principal deficiency event. The deal's current outstanding .......

    News Round-up 22 March 2012

  • Residual value

    Case for subordinated CLO investment remains

    The investment case for mezzanine and subordinated CLO positions remains strong. One European CLO manager has just announced the second close of a fund investing in such assets, while another Europe-based structured credit fund has reported a 15.6% month-on-month rise in mark-to-market valuations of its subordinated CLO positions.

    Pearl Diver Capital has completed a second close of its second fund, .......

    News Analysis 20 March 2012

  • Investment firm adds two

    London-based securitised products investment firm Pearl Diver Capital has announced two new appointments. Michael Brown has been named avp, structuring and quantitative analytics, while Georgia Jelliman has been appointed head of operations/middle office. Matthew Layton, vp of credit, has been promoted to partner at the firm.

    Chandrajit Chakraborty, managing partner and co-founder, continues as cio and leads Pearl Diver's trading .......

    Job Swaps 19 March 2012

  • A2E record reached

    At nearly US$17.3bn across 14 different issuers, February's US loan amend-to-extend (A2E) volume was the most since April 2011 and its number of amending issuers a record high, according to CDO strategists at RBS. This is said to reflect broader market recognition that A2E is an inexpensive way for issuers to take advantage of the open credit markets and low .......

    News 19 March 2012

  • CLO warning issued

    Fitch has identified one implementation of the Volcker Rule that could have unintended consequences for corporate issuers that access capital through the leveraged loan market and CLOs. This risk has been also been noted by several industry associations, notably the Loan Syndications and Trading Association (LSTA).

    The agency points out that CLOs do not engage in activities the rule is .......

    News Round-up 14 March 2012

  • Amend-to-extends proliferating

    Cengage, the seventeenth largest corporate exposure and represented in about half of the CLO universe, is targeting a three-year extension on its 2014 loan. Participants in the amendment would benefit from a 30% loan pay-down, increased spread and a consent fee, according to LCD. The largest position any one CLO has in the credit is about 5%, with average exposure .......

    News Round-up 13 March 2012

  • CLO supply supporting loan fundamentals

    The pick-up in CLO volumes early in 2012 is supporting an improvement in leveraged loan market fundamentals, Fitch notes. The agency expects the growing pipeline of CLO deals to keep loan spreads relatively tight, leading more leveraged borrowers to tap the loan market in order to refinance heavy 2013 and 2014 maturities.

    The improved tone of the leveraged loan market, .......

    News Round-up 9 March 2012

  • Trading vet resurfaces

    Alan Packman has joined Knight Capital Group as head of structured credit trading. Packman was most recently at UBS Investment Bank, where he was head of CDO trading for Europe.

    The trader has considerable experience across structured finance and has previously worked at Aladdin Capital Management, Hoare Capital Markets, Dresdner Kleinwort, Lloyds TSB and WestLB trading ABS, MBS, CDOs and .......

    Job Swaps 6 March 2012
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