CDOs/CLOs

The collateralized loan obligation market is ending the year at nearly full throttle with nearly $18 billion in new deal/refi volume month-to-date, with more on the way.

The first refinancing, in January, was primarily intended to extend the life of the post-reinvestment period deal; this time, the manager is also lowering the interest paid.

Lee Shaiman, who oversaw $20 billion in leveraged finance and other fixed-income investments at Blackstone, will succeed Bram Smith. who announced his retirement in early 2017.

The collateralized loan obligation manager launched a fifth 2017 U.S. deal totaling $510 million, while its European subsidiary is preparing a third transaction totaling €400 million.

The $12.9 billion in collateralized loan obligations issued last month brings the 11-month total to $108 billion, just shy of the 2014 record of $124 billion.

Three broadly syndicated deals printed in December have senior, AAA-rated tranches that pay just 107 basis points over Libor - the lowest coupon of the year.

The deal, BXMT 2017-FL1 weighs in at $1 billion, making it more than twice as large as most CRE-CLOs issued this year; its size isn't the only unusual feature, however.

Junk-rated firms pay little tax, and so won't benefit much from a lower corporate rate. And this benefit could be offset by a limit on the interest deduction.

The dramatic tightening in loan spreads this year made it difficult for the CLO manager to manage to various performance metrics of its deals, and this required building flexibility into deals being refinanced.

Carlyle Euro CLO 2017-3 is the latest under its new shelf managed by affiliate CELF Advisors, with a AAA coupon of just 75 basis points over three-month Euribor.