The summer lull descended upon the market as CDO issuance reached paltry levels last week. While arbitrage and structured product CDOs make up the bulk of the current pipeline, market talk focused on high yield loan-back vehicles and wider-than-expected spreads.
As July opened, CDO issuance for the U.S. market hit approximately $22.2 billion, according to JP Morgan Securities, down from the $28.7 billion tallied at the same point in time last year. Issuance for the start of the month was extremely slim, just $350 million, thanks entirely to the pricing of Goldman Sachs-led NYLIM Flatiron CLO 2003-1. An arbitrage deal managed by New York Life, sources report the top tranche priced at 55 basis points over three-month Libor. The July 4 holiday obviously impacted the market; however, take heart of the fact that July 2002 cashed out at $2.08 billion, according to JPMorgan figures.