U.S. CLO Issuance Drops to $4.8B in November

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Ten U.S. collateralized loan obligations totaling $4.8 billion were issued in November, marking the lowest monthly level since January 2014, according to Thomson Reuters LPC.

That brought issuance for the first 11 months of the year to $91.4 billion, down from $115.8 billion in the year-ago period.

The average size of CLOs backed by broadly syndicated loans (as opposed to middle market loans) edged lower to $481 million in November, with deals ranging in size from $305 million to $995 million.

The average deal size this year is $531 million.

European CLO issuance stands at €13.4 billion (through Dec 2), roughly the same as the figure recorded in the corresponding period a year ago.

Three deals totaling €1.28 billon priced in November, while another two deal totaling €931 million priced in the first couple of days of December.

U.S. CLOs now have $421 billion in assets, while European CLOs are at €65 billion.

The top three holdings in U.S. CLOs are Valeant Pharmaceuticals, at $3.63 billion, First Data Corp., at $3.58 billion, and Asurion Corp., at $2.92 billion.

European CLOs have the most exposure to Numericable at €1.17 billion, ZIGGO at €1.03 billion, and eircom Group, at €0.95 billion.

Cablevision, Pharmaceutical Product Development, and Berry Plastics were the most actively traded names in U.S. CLOs in the August to October period, while Securitas Direct AB, VWR Funding, and Coty were the most actively traded names in European CLOs.

A major driver of the slowdown in U.S. CLO issuance is the lack of collateral. Year to date, there has been $651 billion of leveraged loans issued, down significantly from the $870 billion recorded in the same period last year.

The drop in volume versus last year is much more pronounced in loans syndicated among CLOs and other institutional investors (down 37%) compared with loans syndicated among banks (down 14%).

The institutional loan pipeline is at $29 billion in early December, down from $46 billion a month ago.

New money volume has accounted for 49% of leveraged loan issuance this year, up from 41% last year. Refinancing activity has suffered a bigger drop in 2015, down 35%, versus a 12% fall in new money volume.

Second-lien issuance amounted to $1 billion in November, bringing YTD issuance to $13.1 billion, far below the $36 billion recorded in the year ago period.

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