The high yield bond market isn’t the only corner of the debt universe to defy the traditional sleepiness of August this year and keep churning out deals—the leveraged loan and CLO markets have declined to take their summer siesta as well.

Leveraged loan volume in August not only topped expectations but it proved to be the busiest August on record. Banks arranged $15.9 billion of new loans, including $11 billion of institutional tranches, as of August 24, according to Standard & Poor’s Capital IQ LCD.

Strong technicals, benign macroeconomic conditions and demand from investors all played a role in August’s robust volume. And new collateralized loan obligations continue to be a driving force on the demand side, with summer CLO issuance also surpassing expectations.

During the last couple of weeks of August alone, five CLOs totaling roughly $2.55 billion priced, including the largest broadly syndicated deal of the year and a unique transaction with a 40% bond bucket. That brings total 2012 volume to $26 billion, according to Royal Bank of Scotland analysts, or more than double the $12.5 billion issued last year.

Ares Capital priced the year’s largest broadly syndicated deal, a $719 million CLO, on Wednesday, Aug. 29, via arranger JPMorgan. The transaction came on the heels of a $413 million offering from Columbia Asset Management, arranged by Citigroup, on Aug. 28.

The prior week saw GoldenTree Asset Management print a $590 million CLO, via Bank of America Merrill Lynch, that can invest as much as 40% in corporate bonds, second-lien loans or unsecured loans, along with a $404 million transaction from Alcentra and a $415.8 million deal from Blackrock.

Triple-A pricing on this most recent batch of CLOs has hovered around Libor plus 150 bps, except for the GoldenTree deal which hit 250 bps due to the large allocation to unsecured assets, roughly four times the usual 5% to 10% maximum.

In addition to robust volume, 2012 has seen a notable increase in the number of CLO managers that have printed new deals. Better access to open-market equity and warehousing lines has allowed a broader number of players into the game. In all, 43 managers have inked a deal this year, the most since 2007, and up from 28 in all of last year, according to S&P Capital IQ LCD.

Managers that completed deals during the first half of August include ING Asset ManagementHalcyon, SymphonyAmerican Capital StrategiesHighbridgeFranklin Advisers, andTICC Capital.

It appears that, if there are no severe macroeconomic hiccups and demand for triple-A paper continues to improve, 2012 is well within reach of the high end of earlier predictions and could see $30 billion of CLO issuance.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.