While one could hardly call the CLO market healthy, the rumors of its demise may be slightly exaggerated. It's not impossible to get a CLO transaction done, though a significantly easier time will be had by all if arrangers stay realistic about pricing and forget going the market value route, sources said. This market is going for cash.

With the recent news of vast restructurings to rescue total-rate-of-return market-value CLOs from liquidation (BLR, Feb. 18, 2008), on top of deflated loan prices and a dearth of investors, the CLO market has certainly seen better days. But activity has not stopped; CLO dealers have quietly priced four cash-flow CLOs since the beginning of the year -the $750 million ECP CLO 2008-1, managed by Silvermine Capital Management and arranged by Citigroup; the $350 million Galaxy X CLO Ltd. managed by AIG and arranged by Lehman Brothers, and two Morgan Stanley-arranged funds, one for Camulos Capital and one for Babson Capital Management - and sources say others are in the works. So while it may not be the massive party of the golden 2005 to mid-2007 era, it's not a wake either.

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