Issuance of U.S. CLOs Rebounds to $11B in June: Thomson

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After slowing in May to $5.66 billion, U.S. CLO issuance bounced back to $11 billion in June, bringing total volume for the first half of the year to $58.3 billion, according to Thomson Reuters.

That’s just shy of the $60.8 billion printed in the first half of 2014, a record year.

Assets held in collateralized loan obligations climbed again in June, reaching $413 billion (based on a universe of 948 CLOs), up over $77 billion a year ago.

Assets in bank loan mutual funds and exchange traded funds – the other biggest investors in leveraged loans, slipped in June to $137 billion in June. Year-to-date, assets in these funds are down 3%.

As a result, CLOs’ share of the institutional loan market is now at 49%, up four percentage points since the start of the year, while loan mutual funds & ETFs currently account for 15% of the market.

The average size of CLOs backed by broadly syndicated loans (as opposed to loans to small and medium-sized companies) increased to $512 million in June, but was still the second lowest monthly level this year.

In Europe, CLO issuance amounted to €4.5 billion in the second quarter, exceeding the figure of €3.3 billion recorded in 1Q15.

Total volume for the first half totaled €7.8 billion, up from €6.9 billion in the year ago period.

On a monthly basis, European CLO issuance fell to €767 million in June (based on two deals), down from €2.4 billion (and six deals) a month earlier.

Total assets in European CLOs edged up to €68 billion (based on a universe of 246 European CLOs).

Thomson did not provide average data on yield spreads for U.S. CLOs in its June report, but a list of prices on new deals indicates that spreads on triple-A tranches ranged from Libor plus 125 basis points (for Fortress Credit Investments CLO 2015-IV) to Libor plus 185 basis points (for Carlyle GMS Finance MM CLO 2015-I).

The top loans held in U.S. CLOs at the end of June were First Data Corp. ($3.26 billion) Valeant Pharmaceuticals (3.19 billion), Asurion Corp. ($2.81 billion), Community Health ($2.39 billion), and Albertson ($2.18 billion).

As a group, the biggest exposure of U.S. CLOs is to technology (11%), healthcare (10.7%), and retail & supermarkets (7%) .

The top 10 sectors account for 63% of overall U.S. CLO loan holdings

For European CLO loan holdings, the top sectors are general manufacturing (13.7%), healthcare (11.4%), and technology (9.6%).

The top 10 sectors account for 74% of European CLO loan holdings

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