Issuance of U.S. collateralized loan obligations fell again in September, amounting to $4.9 billion, according to Thomson Reuters LPC. That brought volume for the first nine months of the year to $78.6 billion.
By comparison, at this point last year, issuance was $93.9 billion.
The slowdown mirrors one in issuance of broadly syndicated, below investment grade corporate loans, which reached $142 billion in the third quarter, on the back of a 37% drop in pro rata issuance and a 52% slump in institutional volume.
In the first nine months of the year, there has been $537 billion of leveraged loans issued, markedly lower than the $746 billion recorded in the same period last year. High equity valuations and competition from strategic buyers have kept the volume of deals backed by private equity firms down. More recently, market volatility has also impacted activity.
A single European CLO, sized at €517 million, priced in September, bringing third quarter issuance to €2.54 billion, down from €4.50 billion in 2Q15. European CLO issuance for the first nine months of the year is at €10.3 billion, just above the €9.9 billion recorded in the same period a year ago.
U.S. CLOs now have $414 billion in assets under management, while European CLOs are at €66 billion.
Based on the aggregated value of their holdings, the majority of loan assets in CLOs are currently bid in the 99-plus area. European CLO loan holdings are on average bid higher than US CLO loans.
Valeant Pharmaceuticals, Dollar Tree Stores, and Petsmart have been the most actively traded names in U.S. CLOs this year.
Healthcare, electronics, and printing/publishing & broadcasting have been the most actively traded industries in U.S. CLOs this year. Thirty-one out of 35 industries saw buying volume exceed selling volume.
In terms of face value traded, SEAT Pagine Gialle SpA (the deeply discounted equity), Ineos Group Ltd, and Wind Telecomunicazione Spa have been the most actively traded names in European CLOs this year.
U.S. CLO managers’ trades in oil & gas names have been tilted markedly towards selling activity in the third quarter. This is in contrast to the first half of the year when buying activity represented a bigger share of trading volume.