CDOs/CLOs

GSO Capital Partners, a credit investment arm of Blackstone Group, is in the market with a $633 million CLO.

Until the financial crisis brought CLO issuance to a virtual halt, CLOs were among the largest and fastest growing structured products in the marketplace, representing approximately 60% of institutional participation in syndicated loans in 2006. While the long-term impact of the Dodd-Frankrisk retention rules on CLOs remains uncertain, the short-term outlook for new CLO issuance is promising. As spreads on the triple-A rated tranches of CLOs have continued to tighten, the arbitrage on CLO collateral has become increasingly attractive in recent months. For the first time since the onset of the financial crisis, CLOs are showing signs of a sustained revival.

The U.S. Congress and U.S. regulatory agencies have imposed or proposed broad-based and aggressive laws and rulemaking in response to the failure of securitizations directly or indirectly backed by U.S. subprime residential mortgage loans originated in the several years prior to the onset of the financial crisis in 2007. Notwithstanding this aggressive response, there is no empirical evidence that transactions backed by other types of assets, including asset-backed securities (ABS) of foreign issuers, have been prone to such failures or merit coverage in the same regulatory scheme as applies to securitizations backed by subprime residential mortgage loans.

From Brussels to D.C., the season of powwows is here, and ASR's editors have certainly been getting around.

Regulation was a main focus at the recently concluded Global ABS 2011 conference held in Brussels in mid June. One of the issues was Solvency II, the proposed new European regulatory regime that, according to a report by Moody's Investors Service, is probably going to increase regulatory capital requirements for both European Union and European Economic Area insurers and reinsurers when it is implemented in 2013.

Tejas Securities Group, a wholly-owned subsidiary of Westech Capital Corp. hired Samir Shah as managing director and co-sales manager of structured products.

Moody’s Investors Service may upgrade some $237 billion of CLOs as a result of a change in its ratings methodology.

Bank policyholders suing the New York Insurance Department (NYID) and MBIA Inc. say new documents made available to the public show MBIA senior executives concealed critical information from the NYID about the size of future losses at MBIA Insurance Corp.

JPMorgan Securities has agreed to a settlement with the U.S. Securities and Exchange Commission (SEC) concerning its 2007 sale of CDOs called Squared CDO 2007-1, according to a press release from the firm.

Like every sector in the European securitization market, CLOs are struggling with the onslaught of regulation.