CDOs

Since Nov. 21, investors have withdrawn a net $14.88B from the loan fund market amid concerns the Fed will limit rate hikes in 2019; the exodus makes loans even more of a buyer's market for CLOs.

A Wells Fargo report this week shows that market spreads for the triple-A notes backed by collateralized loan obligation assets are at 128, a level not seen since May 2017.

The $500 million AIG CLO 2018-1, AIG's first deal since selling off its asset management business in 2010, is priced at 132 basis points over three-month Libor.

The €350 million Providus CLO II is backed exclusively by loans to mid-market firms that meet the private equity firm's sustainability criteria; at closing, 90% of the collateral has been identified.

The LA-based manager is pricing the replacement AAA notes of Oaktree EIF III Series 1 inside recent market averages through a limited, brief noncall extension.

The $308 million Deepath CLO 2018-1 has an unusually large allowance for riskier triple-C loans of up to 17.5% of the portfolio.

The $153.7 million Peaks CLO 3 also features a high ceiling for triple-C-rated loans and for "current-pay" loans that meet one or more criteria for default.

Both managers are pricing their 3rd CLOs of 2018; the 135 basis point spread on Zais' is among the widest this year for a deal backed by broadly syndicated loans.

Guggenheim joins GSO/Blackstone and Bain Capital as longtime CLO managers expanding into the SME space this year.

More collateralized loan obligations are failing weighted-average lift tests due to the dearth of available loans whose near-term maturities could provide some relief to portfolios.