CDOs/CLOs

For investment firms that profit by buying the debt of troubled companies, it looked like the opportunity of a lifetime: a $1 trillion pile of distressed bonds and loans in the Americas alone as the pandemic sent markets into meltdown last March.

The leveraged loan market has long been the favored financing source for private equity firms looking to juice returns on corporate takeovers and to reward themselves with payouts before selling their acquisitions.

Kovensky, whose departure from the posts is effective April 1, will stay on as a board member at the $17 billion credit management division of Onex Corp. Co-CEO Jason New will become head of credit as part of the transition, while Peter Zaltz will become chief investment officer.

Yellen announced she has revived a hedge fund working group so agencies can “share data, identify risks and work to strengthen our financial system."

A white paper released Monday by the Alternative Reference Rates Committee outlined how issuers could (and perhaps should) model new floating-rate transactions using a compounded version of the interbank overnight rate instead of Libor.

Sales have risen following a difficult 2020 as issuers seek to tap higher demand to offload the securities cheaply and cut costs on existing deals through refinancing and so-called reset transactions.

The 2021 deal tally is split between $37 billion in new-issue transactions along with $68 billion in refis/resets, according to S&P Global Ratings.

Don Mullen, founder and chief executive officer of Pretium Partners, says that corporate debt could underperform mortgages this year, with fewer defaults likely for real estate loans and higher recoveries for mortgage-backed instruments.

Deals, trends and research in structured finance and asset-backed securities for the week of March 19-25

U.S. companies including Hilton and Avis are so anxious to lock in low borrowing costs now, before inflation fears push yields even higher or close the market altogether, that they’re paying millions of dollars in penalties to refinance debt early.