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
