Purchases by U.S. CLO managers spiked to 63% in the fourth quater of 2016, as loan priced climbed to their highest levels since the second quarter of 2015.

According to Thomson Reuters LPC, buying activity reached $35.42 billion in the quarter, compared with $21.18 billion of selling. The total trading volume of $56.6 billion in the quarter up 7% growth from the $52.9 billion level in the third quarter.

Both levels fell short of the $65.4 billion in buy/sell volume in the second quarter, but the fourth-quarter trading volume was the second-highest level since the market saw $62.3 billion in trading activity in the first quarter of 2014.  

CLO managers last fall competed with surging investor demand for loans as the percentage of loans trading near par (99 cents on the dollar) rose to 84% of CLO loan buys in the quarter – compared to 78% in the third quarter.

Loans selling above par rose to 59% of CLO loan sales, compared to 49% the quarter prior.

Among the most widely bought debt in the market belonged to Bass Pro Group LLC ($770.9 million), Quikrete Holdings ($602.04 million) and Virgin Media ($590.74 million). Valeant Pharmaceuticals was the most widely sold names for CLOs, with managers unloading $245.79 million in loans at a weighted average price of 99.46 cents on the dollar.

Electronic represented the most widely traded sector in the quarter, following by printing/publishing/broadcasting and by healthcare. A majority of industries (30 of 35 tracked by LPC) saw buying exceed selling activity.

In Europe, buying outpaced selling activity by a 2-to-1 ratio in the fourth quarter, $4.95 billion to $2.46 billion.

European CLO portfolio purchases prices reached their highest levels since the second quarter of 2015. The weighted average purchase price rose to 99.96 against an average sale price of 97.84.

LPC stated the fourth-quarter analysis included trading activity for 755 U.S. broadly syndicated CLOs and 154 European CLOs.

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