CDOs/CLOs

Execs at both closed-end funds say expectations for an eventual rise in defaults are driving their strategy to extend reinvestment periods on CLOs in their portfolios.

The investors initially won the right to sue as a group in 2015 before an appeals court reversed the ruling; the $13 billion lawsuit can now proceed as a class action.

The distressed-debt manager now manages 26 U.S. CLOs totaling $15.5 billion, the most of any domestic CLO market manager.

The £325 million Dryden 63 CLO, sponsored by PGIM, will issue six classes of sterling-denominated notes; Barclays’ £4.5 billion Sirius Funding is issuing three tranches in three different currencies.

The eligibility criteria for loans that can be acquired are “more liberal” than recent CRE CLOs rated by Kroll; they are also more liberal than those of Hunt’s initial CRE CLO, completed last year.

While Carlyle has been judicious with new issuance, it had a busier second quarter in refinancing older deals; several more will be ripe for refinancing in the third quarter.

Mindful Wealth, an investment firm based in Singapore, is raising money to put to work in some of the riskier tranches of U.S. collateralized loan obligations, those rated BBB and B.

Recent documentation tweaks that afford "excessive amounts of flexibility" to CLO managers can introduce "material, and even unquantifiable, risks" into transactions, according to the rating agency.

The Chicago-based corporate small-business lender and CLO management firm also reduced the cost in subordinate notes as it chose to maintain the existing reinvestment and maturity periods limiting the deal's shelf life.

The triple-A rated senior tranche of Ares European CLO X has a coupon of 85 basis points above Euribor, an indication that a four-month widening trend in Europe CLO spreads continues; the deal is expected to close in September.