Standard & Poor's expects CLO portfolio credit to be stable this year, said the agency's analysts in an emailed report released this morning.

CLOs have limited exposure to 126 credits that S&P’s Global Fixed Income Research group listed as having high credit stress levels, the agency said.

The credits are in troubled sectors, including media and entertainment, consumer products, and health care. Within the top 250 names that are across CLO portfolios, which represent 65% of the total, only 11 names are present on the list.

S&P said that the biggest exposure in Aramak Holdings  is at the No. 11 spot for CLOs. This comprises less than 1% of the collateral in S&P-rated CLOs.

In a separate item, S&P also commented that as CLO reinvestment periods from 2006 and 2007 come to end, the CLO market's overall size will drop in 2012 like the other structured finance sectors. 

S&P analysts projected that as loans backing CLOs mature, paydowns of senior tranches will happen faster. The agency is expecting $15 billion in CLO issuance this year.

S&P reported this morning that the first CLO deal for 2012 has priced called Golub Capital Partners CLO 12 Ltd., which is worth $250 million. The middle market CLO's 'AAA' portion pays Libor plus 200, which is similar to the last middle market transaction that was issued called Ivy Hill Middle Market Credit Fund III Ltd, according to the rating agency's presale report. 

Yesterday's transaction is the second CLO issued by Golub in the last six months and it is also the firm's fifth middle market CLO.

For ASR's sister publication Leveraged Finance News' coverage of the transaction, please click here.


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