Fitch Ratings said Thursday it anticipates a “moderate” amount of call activity in the collateralized loan obligation market as players take advantage of cheaper funding costs available for new deals.

The ratings agency noted in its latest CLO Market Quarterly that all 33 outstanding, broadly syndicated CLOs issued in 2010 and 2011 have already or will exit their non-call periods in 2013.

Fitch said the activity could take the form of traditional calls, refinancing, or re-pricing of note liabilities.

When comparing the senior-most liability cost of funding, 20 of the outstanding 33 CLOs pay their senior-most liability a spread above 140 basis points, while 11 of those CLOs have senior notes that require a spread of 160 basis points or greater.

One of these CLOs is already scheduled to call its notes in January. It did not name the deal.

Fitch noted in its report that 42 broadly syndicated CLOs totaling nearly $21.8 billion were priced during the fourth quarter, making it the most active quarter of 2012 and bringing the total issuance for 2012 to $51.9 billion from 111 deals.

Pricing on the senior-most class of notes averaged 142 basis points during the quarter, below the 150 basis points average for the third quarter and slightly better than the 144 basis point-average for all of 2012.


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