Issuance of U.S. collateralized loan obligations climbed to $8.4 billion (via 17 deals) in October, the highest monthly figure since June 2015, according to Thomson Reuters LPC.

This brought volume for the first 10 months of the year to $54.5 billion (via 120 deals), down from $86.6 billion (via 165 deals) in the same period last year.

An additional $4.8 billion, via 21 deals, were refinanced or had their interest rate reset have surged in advance of the upcoming risk retention deadline. This brought YTD combined refinancing/reset volume to $16.3 billion from 43 deals.

Once the regulations take effect on Dec. 24, most refinancing will trigger compliance, compelling managers to retain 5% of the economic risk in their deals. Managers also have an incentive to refinance in order to take advantage of low interest rates. Deals that refinanced in October reduced their weighted average debt costs by a median of 19 basis points, according to Wells Fargo, while deals that were reset increased their weighted average debt costs by 2 basis points. 

Spreads on new deals also moved in during the month; the senior tranches of CLOs backed by broadly syndicated loans was 148 basis points over Libor in October, down from 153 basis points a month earlier. Spreads on these triple-A rated tranches ranged from a low of 143 basis points to a high of 159 basis points, according to Thomson Reuters.

The average size of the fifteen CLOs backed by broadly syndicated loans (as opposed to loans to smaller companies) issued in October slipped to $504 million, with deals ranging from $404 million to $717 million.

Year to date, the average deal size is $459 million, down from $534 million a year ago.

The European CLO market saw another €1.7 billion of issuance from four deals in October. Issuance is at €13.5 billion (via 33 deals) so far this year, up from €11.2 billion (via 28 deals) in the same period last year.

Assets under management increased to $438 billion for U.S. CLOs and to €66.5 billion for European CLOs

 

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