Bank of America Merrill Lynch is forecasting CLO issuance for 2012 of $15 billion, only marginally higher than the level it anticipates for the current year.
Two new issues totalling $1.4 billion priced last week, a $1 billion CLO brought by Guggenhiem Investment Management and a $400 million deal by Sankaty Advisors. That brought total issuance for 2011 to approximately $10 billion — several times more than the $2.5 billion issued in 2010 and was the first time the asset class saw issuance in “double-digit” territory since 2008, according to BofA Merrill.
In research published Monday, BofA Merrill analysts said the pipeline of deals is “reasonably full for now,” and they expect to see another $2.5 billion of deals by the year’s end.
Going into next year, BofA Merrill expects that the number of existing CLOs slated to exit their reinvestment periods will support new issuance. At the same time, they said, the “lingering broad market uncertainty will very likely continue to lead to pipeline disruptions as has been the case throughout 2010 and 2011.”
Given the confluence of these two opposing forces, they set their initial estimate for 2012 issuance at $15 billion.