To paraphrase the late crooner Frank Sinatra, Fitch Ratings expects 2005 will be "a very good year" for middle-market CLO issuance, as the agency is gearing up to rate more transactions in the relatively young asset class. Fitch warned, however, that anyone thinking of entering middle-market CLO land should make sure to bring the right tools for the job, as the asset class requires a different type of analysis than many asset managers and investors may be used to.

Alla Zaydman, analyst with Fitch, said she expects 2005 middle market loan issuance to equal or exceed last year's $168 billion, which was a $60 billion increase from the year before. "There is a large amount of issuance right now, and coupled with investor demand, we definitely think it will be a robust year," said Zaydman. "We're probably going to see more innovative structures in 2005. Investors have gotten more comfortable with this asset class over the past four years and there is good demand for this paper," Zaydman added.

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