CLOs

  • Next step

    Debut CLO part of platform roll-out

    BlueBay Asset Management priced its first CLO on Monday inside recent primary tights and despite the then stalled secondary market rally. The European deal is the next step in the roll-out of the firm’s long-term global structured credit strategy (SCI 31 January). 

    “The obviously challenging market conditions meant that we were especially pleased to so successfully execute .......

    News Analysis 17 June 2020

  • Older CLOs underperforming

    Sector developments and company hires

    Older CLOs underperforming
    A significant proportion of all the US BSL CLOs S&P has on negative watch closed in 2015 or before. The rating agency reports that such deals also experienced a steeper average decline in OC cushion, falling by 3.23%, and their average junior OC cushion is now approaching 0%.

    Of the 410 currently reinvesting deals within the .......

    Market Moves 16 June 2020

  • Californian auto loans eyed

    Sector developments and company hires

    Californian auto loans eyed
    The Westlake Automobile Receivables Trust 2020-2 issuer has disclosed that the state of California is considering new legislation - Assembly Bill No. 2501 (AB 2501) - that could significantly impact auto loan securitisations with high concentrations of Californian loans. S&P notes that in its current form, if this legislation is enacted, it could require servicers of .......

    Market Moves 12 June 2020

  • Synergy search

    CLO manager consolidation to stay sporadic?

    There have been a flurry of CLO manager mergers and transfers recently (SCI passim). However, the need for the right synergies and difficult market conditions makes it likely that such deals will remain sporadic.

    “There are maybe a few consolidation candidates out there – a few of the smaller firms with only a handful of CLOs and who .......

    News Analysis 11 June 2020

  • Resolve and resilience

    Content sponsored by Ocorian

    James Maitland, regional head of Americas, Bermuda & Caribbean, and global head of capital market services at Ocorian, spoke to SCI about how resilience is benefiting the industry and his firm

    With the traditional office environment disappearing almost overnight and widespread personal restrictions, we have seen a smooth transition and incredible resilience both within our own firm and across the .......

    Talking Point 10 June 2020

  • NCSLT consent judgment denied

    Sector developments and company hires

    NCSLT consent judgment denied
    Fitch has affirmed 37 notes and maintained its rating watch negative placement on nine notes from 12 National Collegiate Student Loan Trust (NCSLT) securitisations. The move follows Delaware District Judge Maryellen Norieka’s decision last month not to approve a consent judgment proposed by the CFPB and purportedly agreed to by the NCSLTs.

    The judgment was .......

    Market Moves 9 June 2020

  • Changing focus

    US CLO primary garners more attention

    Retracement in the US CLO secondary market has been rapid. Now, bolstered by the belief, misguided or otherwise, in a v-shaped economic recovery, attention is shifting to the primary market.

    “The CLO debt rally has been strong – the secondary market has been in the green for more than a week,” says Daniel Wohlberg, director at Eagle Point .......

    News Analysis 9 June 2020

  • Spread compression

    European ABS market update

    The rally in broader risk assets and the lack of new supply has boosted demand for paper in the European ABS secondary market. An increasingly acute supply/demand imbalance is expected to be supportive of valuations over the near term, however.

    “We have been on a bit of tear over the last week and a half,” says one European ABS trader. .......

    News 9 June 2020

  • CLO business integrated

    Sector developments and company hires

    CLO business integrated
    RBC’s US-based CLO management business is being integrated into BlueBay’s CLO management platform. Sid Chhabra, who joined BlueBay – which is owned by RBC - in 2018 to build the firm’s structured credit and CLO capabilities, will lead this team. The US-based team includes four experienced individuals and the US$500m CLOs they manage.

    In other news…

    Market Moves 8 June 2020

  • Conduit CMBS on watch

    Sector developments and company hires

    Conduit CMBS on watch
    S&P has placed its ratings of 96 classes from 30 US conduit CMBS on credit watch (CW) with negative implications, reflecting the bonds' exposure to the adverse impact of Covid-19 on the lodging and retail sectors, and the related uncertainty about the duration of the demand disruption. The agency says it will resolve or update the .......

    Market Moves 4 June 2020

  • Experience counts

    CLO managers surveyed

    Manager differentiation remains a key issue in the CLO market, with many investors focusing on individual experience of past crises. A new survey of CLO managers by Fitch provides some reassurance in this regard.

    "Whether portfolio managers have experienced a full credit cycle or two, and evaluating workloads amid the added pressures of credit quality deterioration are real .......

    News 4 June 2020

  • Long road ahead

    CLO secondary pricing action premature?

    Sentiment in the CLO secondary market is overwhelmingly positive, which is showing up in recent pricing levels. While such sentiment is hopefully not misplaced, it is perhaps somewhat premature.

    “Markets are priced to perfection, which is reflected in the rally, particularly at the top of the stack,” says Laila Kollmorgen, md and CLO tranche portfolio manager at PineBridge Investments. “Clearly .......

    News Analysis 3 June 2020

  • More Euro CLOs on review

    Sector developments and company hires

    More Euro CLOs on review
    Moody’s has put a further 234 tranches from 77 European BSL CLOs on review for possible downgrade. The securities involved are rated Baa2 to B1 and below. The action brings the total number of European CLOs Moody’s has under negative review to 351, representing around 16% by count, or 6.5% by balance, of its rated .......

    Market Moves 3 June 2020

  • New paradigm?

    Trustee discretion required in virtual environment

    The coronavirus crisis ushered in a new paradigm for securitisation noteholder communication and documentation processes, as remote working was enforced. This change has demanded flexibility from trustees and agents amid the uncertainty.

    Morgan Krone, partner and head of the global corporate trust and agency practice at Allen & Overy, says: “I think trustees and agents have done extremely .......

    News Analysis 2 June 2020

  • Managers measured

    CLO manager pandemic performance quantified

    US CLO managers have worked harder than ever before to reduce triple-C exposure and build par in unprecedented circumstances since the start of March. Now, as rating downgrades appear to have plateaued it can be seen that their industry has met with some success, according to a new report from S&P.

    “The credit profile of US CLO collateral .......

    News 2 June 2020

  • Equity opportunities?

    Sector developments and company hires

    Equity opportunities?
    Despite a lack of visibility and liquidity and with cashflows likely to deteriorate further into upcoming July payment dates, there may be some opportunities in the CLO equity space, according to a new research report from JPMorgan.

    It finds that while NAVs remain negative, there has been some improvement between March lows and late 2019. Equally, cashflow .......

    Market Moves 1 June 2020

  • Renewables JV inked

    Sector developments and company hires

    Renewables JV inked
    By way of a joint venture, illimity Bank and VEI Green II have set up a securitisation vehicle for distressed loans with underlying assets that produce electricity from renewable sources. This vehicle will invest up to €100m and operate in both the Italian primary and secondary energy markets. The partnership has commenced activities by carrying out its .......

    Market Moves 29 May 2020

  • Growth phase

    European CLOs seeing increasing attention to ESG criteria

    The current crisis has initiated further discussion surrounding sustainability. Expectations are that investor demand and policy changes will further integrate ESG considerations into the CLO investment process.

    Andrew Lawson, head of capital markets at Permira Debt Managers, says: “Investors continue to pay increasing attention to ESG criteria, particularly following this pandemic. As the investors demand greater focus on ESG principles, .......

    News Analysis 28 May 2020

  • Pan-European guarantee fund launched

    Sector developments and company hires

    Pan-European guarantee fund launched
    The EIB board has approved a €25bn Pan-European Guarantee Fund (EGF) - which will be funded by EU member states pro rata to their shareholding in the bank – as part of its overall response to the Covid-19 crisis. By guaranteeing parts of portfolios, operations under the guarantee fund will free up capital for financial intermediaries .......

    Market Moves 27 May 2020

  • CLO tender offer launched

    Sector developments and company hires

    CLO tender offer
    The Black Diamond CLO 2015-1 issuer has launched a tender offer to all noteholders of the €176.3m class A1 and the US$67.2m class A2 notes. The purchase price for any bonds tendered under the offer will equal 98.75% of the principal amount outstanding of each note. The offer expires on 2 June, with settlement due on 9 .......

    Market Moves 22 May 2020

  • Back on hold

    European MM CLOs stymied by pandemic

    The long hoped for pick up in European middle market (MM) CLO issuance was expected to arrive in 2020. However, thanks to the Covid-19 crisis, plans have had to be put on hold as middle-market firms focus on survival.

    A new report from DBRS Morningstar suggests that the crisis has set back the progress of MM CLOs in .......

    News 22 May 2020
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