The pace of CLO issuance continues to pick up in March as participants become more comfortable with collateralized loan obligations that comply with the Volcker Rule.
Approximately $4.2 billion of collateralized loan obligations were issued in the first two weeks of March, according to research published Friday by Wells Fargo. This brings issuance for the year to date to $15.7 billion.
Issuance slowed in January following the December release of the final version of the Volcker Rule, which puts CLOs backed by bonds or other kinds of securities off limits to banks, some of their biggest buyers. CLOs launched this year do not have the ability to invest in bonds.
In the report, analyst David Preston said that issuance for the month-to-date is running slightly ahead of the $4.1 billion issued in March 2013. “It is our belief that, with a full CLO pipeline, March 2014 should be another strong month for CLO issuance,” he wrote.
Among the CLOs that launched or were priced last week were a $625 million transaction sponsored by Greywolf Capital Management and underwritten by J.P. Morgan; a $555 million deal sponsored by Octagon Credit Investors and arranged by Wells Fargo Securities; a $536 million deal sponsored by Zais Leveraged Loan Manager and arranged by J.P. Morgan Securities; and a $552.5 million deal sponsored by Neuberger Berman and arranged by Morgan Stanley.
