CDOs

A wave of corporate loan refinancings is putting collateralized loan obligations afoul of a covenant designed to safeguard their own investors.

HPS Investment Partners is adding a new name to one of its legacy Highbridge CLOs, as well as piling on extensive changes to note structure, deal terms and restrictions on some higher-risk assets.

Just $7.6 billion of deals were refinanced or reset in September, bringing the total for the third quarter to $27.2 billion, far short of the pace of the first half, when approximately $138 billion was reworked.

Unlike the sponsor's previous transaction, which recycled collateral issued pre-crisis, this one includes newly issued securities intended to help small banks and insurance companies raise capital.

RREEF America, the real estate investment unit of Deutsche Asset Management, is securitizing an unusual mix of speculative-grade project finance and corporate in a debut $431.3 million collateralized debt obligation.

The liquidation of Veneto Banca and Banca Popolare puts increasing pressure on other banks in the Eurozone to reduce their holdings of bad loans, according to Fitch Ratings; it remains to be seen whether securitization will play a significant role.

CLO managers who accept lower interest payments on loans risk running afoul of deal covenants; but if they take their money back, there are few attractive options for putting it back to work

KKR is undertaking a rare refinancing of a 2014-vintage collateralized loan obligation that does take advantage of a one-time exemption from risk retention requirements.

The Massachussetts Educational Financing Authority is issuing $162.23 million of private student loan revenue bonds; Fannie Mae obtains more front-end credit risk transfer; Canadian Tire Bank taps credit card market.

At an industry conference Thursday, three former banking and capital markets regulators – including former U.S. comptroller Eugene Ludwig – joined in the chorus of industry voices doubting that any near-term relief from Dodd-Frank rules is on the table.