European collateralized loan obligations underperformed other types of securitization in the region in the first half of 2014, but Barclays expects CLOs to catch up on some of the ground they lost.

In a report published Tuesday, analysts at the bank predict that spreads on European CLOs issued in the second half will be 15-40 basis points narrower.  It expects that spreads on triple-A rated tranches could tighten by 15 basis points, while spreads on double-A rated bonds could tighten by 20 basis points, spreads on single-A tranches by 30 basis points and triple-B tranches by 40 basis points.

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