CLOs

  • 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

  • Bank downgrades threaten trustee roles

    The negative rating outlooks for many banks that serve as trustees on CLOs raises the possibility that at some point certain counterpaties may no longer be eligible to service CLOs and will have to be replaced by the deal's issuers. In Moody's latest CLO Interest publication, the rating agency notes that a change in trustee could lead to servicing delays .......

    News 6 March 2012

  • Spanish SME delinquencies on the rise

    Fitch notes in its latest version of SME CLO Compare that there has been a significant increase in the 90+ delinquency rates for Spanish SME transactions. The 90+ delinquency index now stands at its highest level of 3.2%, based on outstanding portfolio balance, having risen fairly rapidly from 2% at the beginning of last year.

    Default levels are still in .......

    News Round-up 2 March 2012

  • Trimaran acquired

    Kohlberg Capital Corporation has acquired Trimaran Advisors, along with equity interests in certain CLOs managed by the firm. The purchase price consisted of approximately US$25m in cash and 3.6 million shares of Kohlberg Capital common stock.

    Trimaran Advisors currently manages four CLOs with aggregate assets under management of approximately US$1.5bn. The firm focuses primarily on below investment grade corporate debt, .......

    Job Swaps 1 March 2012

  • Up-tick in defaults forecast for leveraged loans

    European CLOs have benefited from lower-than-expected leveraged loan default rates, but Fitch predicts that defaults will markedly increase as weaker borrowers have to refinance their debt. The cumulative default rate for leveraged loans in CLOs since the start of the financial crisis in 2007 is 13%; given the loan ratings then, the agency says it would have expected that number .......

    News Round-up 29 February 2012

  • Euro CLO performance strong, despite challenges

    Fitch notes that while European CLOs have to date performed to expectations with fewer defaults than forecast, fundamental and structural challenges remain for the sector.

    Fitch-rated CLO tranches have seen no losses to date - partly due to the prevailing low interest rate environment, as well as stressed credits amending and extending. The average credit quality of the underlying loans .......

    News Round-up 29 February 2012

  • Smurfit loan extensions agreed

    Smurfit Kappa, one of the largest obligors in the European CLO universe, disclosed that it has received consents in excess of 95% for the amend-to-extend request to its loan facilities sent out this month. The minimum level of consent required was 66.66%, according to European asset-backed analysts at RBS.

    In addition, lenders holding in excess of 85% of Smurfit's B/C .......

    News Round-up 29 February 2012

  • Highland CLO acquisition completed

    The Carlyle Group has completed the acquisition of four management contracts on €2.1bn in European CLO assets from Highland Capital Management. The acquisition brings Carlyle's CLO assets under management to US$16bn via 32 transactions. Financial terms were not disclosed.

    The transaction is Carlyle's first CLO purchase in Europe and builds upon a series of recent CLO acquisitions, including the additions .......

    Job Swaps 28 February 2012

  • Healthy CLO supply continues

    Three US CLOs printed in quick succession last week, bringing year-to-date supply to nearly US$3bn. The new pricings comprise Octagon Credit Investor's US$358m Octagon Investment Partners XII (whose triple-A tranche came at 146bp over Libor), Onex Credit Partners' US$327m OCP CLO 2012-1 (150bp over) and Invesco Senior Secured Management's US$350m Avalon IV (150bp) via Deutsche Bank, Citi and UBS respectively. .......

    News Round-up 27 February 2012

  • UPC extension confirmed

    UPC Holding, the largest single obligor in the CLO universe, has confirmed its TLS debt extension (SCI 16 February). The extension - which pushes out the facility maturity from 2016 to 2019 - was adopted, despite the low consent fee (25bp) and zero margin uplift to debt holders.

    CLO managers currently hold over 51% of the UPC's TLS debt, according .......

    News Round-up 23 February 2012

  • New arrival to build structured credit team

    Nicolas Boutar has joined Dinosaur Securities as structured credit sales director. He is responsible for setting up Dinosaur's structured credit team in the CEEMEA region and organising bids or offers on CLOs and CSOs.

    Boutar joins from BNP Paribas and is based in London. As well as serving as a credit structurer and portfolio manager at BNP Paribas, he has .......

    Job Swaps 22 February 2012

  • Loan extension 'test' due

    UPC's request for lenders to respond to its proposed TLS debt maturity extension ends today. The move is being seen as a test of CLO managers' attitudes towards loan extensions with no margin pick-up.

    UPC - the largest obligor in the European CLO universe - is proposing to extend the TLS, which currently matures in December 2016, by three years .......

    News Round-up 16 February 2012

  • CLO resiliency keeps equity attractive

    RBS analysts have run a series of scenarios to investigate the impact of another credit cycle similar to the one seen in 2008-2011. They find CLOs to be highly resilient during periods of high defaults and advocate investing as far down the capital stack as possible.

    The analysts put 370 US CLO deals from 2005-2007 vintages through three scenarios: a .......

    News 16 February 2012

  • Deerfield CLO acquirer revealed

    Further details have emerged on CIFC Corp's sale of DFR Middle Market CLO (SCI 9 February). The rights and obligations to the transaction under the management agreement have been assigned to DWM Management, an affiliate of Fortress Investment Group.

    See SCI's CDO Manager Transfer database for more recent assignments.

    .......

    Job Swaps 15 February 2012

  • Amend-and-extend activity noted

    The Aramark (which is the 11th most common exposure among US CLOs), Sabre (12th), Nuveen (57th), Caesars (62nd) and Catalent (69th) loans have all had their maturities extended recently. Research analysts at S&P note that such activity could have negative credit implications, with the lengthening maturities likely to extend the WALs of some CLOs.

    "Transactions that are post-reinvestment and mature .......

    News Round-up 15 February 2012

  • CLO operational due diligence recommended

    Fitch says that while manager consolidation in the US CLO market may be positive for bondholders, these newly merged companies require investors to consider operational and associated manager factors as they perform their due diligence.

    "Managers have purchased or merged with other firms to form larger institutions that now provide transatlantic scope and depth on specific issues for bondholders," the .......

    News Round-up 15 February 2012

  • Record week for CLO BWICs

    Last week was one of the busiest the US secondary CLO market has seen since 2Q11. Bid list volume was US$1.3bn, the largest weekly amount in a year.

    Trading off the lists was strong and 99% of paper was traded, with the Street taking down about half of the volume. All tranches were represented on the lists, but the highest .......

    News 14 February 2012
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