Banks predict steady year ahead
It’s the season for predictions and the CLO market is no exception, with all the banks having their say. We’ve rounded up their forecasts for new issuance and resets in the US and Europe

Question your assumptions
Valuing CLO paper is complicated, and loan prepayments are one of the trickiest parts. When pricing a new issue CLO, the market generally assumes that 15-20% of loans will prepay their principal annually. This prepayment rate is important because it essentially determines the pace at which a CLO’s rated debt is paid off after the reinvestment period, when the CLO pays down its own principal.

What matters is what you do with it
CLO managers yearn for flexibility so they can take advantage when credit sells off. But it isn’t enough on its own: triple C-flex CLOs saw portfolios erode this year, while CBOs outperformed

You seem familiar
The overlap between European CLOs has risen to 51.6%, but the largest issuers are only slightly more aligned to their peers at 55.19% — so bonds are proving to be an important differentiator

CLO managers show respect to their elders
Alongside lucrative new issues, managers also make time for refinancing and resetting old deals. Our data shows that, in 2021, mid-sized firms were the most effective at this balancing act

An alternative way of looking at CLO overlap
Analysing CLO collateral to look for overlap is critical for any CLO investor, but it is normally done either within a portfolio of CLOs or by bilaterally comparing two managers. In one of its latest research pieces, Moody’s Analytics has taken a different approach

Chin up – it’s been a pretty good effort
CLO managers did well to survive the covid-19 crash in loan valuations — but they failed to fully capitalise on the ensuing volatility, say participants in the Creditflux CLO Census 2020

Elements work against CLO managers in Q3
CLO equity distributions fell in Q3 largely due to factors, such as Libor mismatches, that CLO managers can’t control. But these headwinds could turn in favour of managers in the near future

Trading places: it can pay to bet on the little guy
It’s assumed investors know how good a CLO manager is by the rate at which they trade their way through a crisis. But this time fi ve small, nimble managers are outperforming the market

Updated, upgraded and ready to launch
Whether it’s a software update or a full-blown upgrade to a newer model, CLO technology is advancing fast, with Be-Spoke and Ellington the latest to launch new types of securitisations

Evolving strategy takes Norinchukin close to top spot in CLO investment
Over the years, Nochu has tweaked its cov-lite stipulations, and added mid market and European CLO exposure to its CLO investments. It’s now nearly the market’s biggest investor  

Engineering and construction: diversification leads to deepening debt
In trying to build a more global roster of clients, some construction companies may have dug a hole for themselves

Managers pick spots on CLO curve
As refi volumes slowed through 2017, the term curve for CLOs steepened, leading managers to vary their deal tenors as they sought to hit the evolving sweet spot.

Payday: Investors go for broke on regulatory bet
New regulations could seriously hamper US payday lenders – but bond holders are betting the rules won’t be enacted

Transport and logistics: heavy debt leaves transporters in jam
With logistic specialists getting a rough ride, debt restructuring could be the next stop for asset-light companies

Leading fund: Lupus Alpha CLO Opportunity Notes I
Single-B CLO trades boost Lupus Alpha asset Management

Spotlight: Satellite operators - sending signals of distress
Satellite operators are trying to transmit optimistic messages – but they admit that prices for data services are falling

Who cares about risk retention?
Managers watching CLO spreads reach their tightest levels since the crisis had little time to fret about US risk retention

US fashion stores: queueing up to exchange old debt
Fashionably loose covenants are allowing under-pressure retailers to turn expensive unsecured debt into senior notes

Real money chooses European credit
Creditflux’s biggest ever survey of institutional investors shows that real money investors are gravitating towards European credit

Rebooting the CLO market
Switching off and on again proved a popular tactic for CLO managers last year as refis and resets helped push issuance to $132 billion

Container shipping: Struggling to stay afloat
Debt and overcapacity mean container shippers must consolidate fast to avoid further wrecks

Medical device makers: Rising leverage may threaten health
Medical device companies have piled on debt while making large acquisitions – and they aren't bringing it back down

Impact of downgrades is not priced in
Barclays warned last month that record numbers of companies may become fallen angels in 2016. Here's our summary of that report and eight others that caught our eye

Finding inefficiencies in iTraxx
Credit derivative indices are big and liquid. But detailed analysis of their historical performance shows they are not always efficient. By Davide Avino and Ogonna Nneji