CDOs

The $2.8 billion in CLOs that have priced this month is not enough to reverse the sluggish 2016 CLO market, which is down over 50% in both deal count and dollar volume compared to mid-2015. But six deals to date in June are pacing toward a third straight month of collateralized loan obligation deal volume topping $5 billion.

Middle market CLOs have never recovered the role that they played in lending to small and medium-sized companies before the financial crisis; that could change now business development companies and other alternative lenders are under pressure.

In a report published Tuesday, Wells said that retailer loans held by collateralized loan obligations are performing as well, if not better, than most of other loans in CLO portfolios, outside of the oil and gas industries. In addition, only 8% of retail loans in CLOs are trading under $80.

A committee convened by the Federal Reserve to examine potential replacements for widely used interbank offered rate benchmarks has published its interim conclusions, identifying two potential alternatives.

Marketplace lenders may be able to teach banks a thing or two about speeding up loan origination, but when it comes to securitization, they could use a few pointers themselves.

The ranks of CLO investors may have thinned this year amid broader bond market turmoil, but it can still be difficult to put money to work with the best managers.

Speaking at IMN’s 5th annual conference on leveraged loans and collateralized loan obligations, LSTA executive Meredith Coffey and SFIG executive director Richard Johns each gave sobering assessments of the inevitable, and possibly debilitating, arrival of new capital ratio and risk retention standards to CLOs and other ABS deals.

Some 69% of collateralized loan obligations completed so far comply with impending risk retention rules, according to Meredith Coffey, research director at the Loan Syndications and Trading Association..

Despite a recent pickup in new issuance of both collateratlized loan obligations and the leveraged loans used as collateral, many participants at an industry conference see more trouble ahead.

There’s a real downside to extremely low or even negative interest rates. Existing CLOs may not earn enough from their euro-denominated assets to pay the interest on the notes they issue.

Deloitte & Touche recently named two co-leads for the CLO services unit of its securitization practice, Hillel Caplan and Lynda Lazzari.

Prices of loans held by CLOs recovered again in April, giving managers some more breathing room. But funding costs, rising interest rates and credit deterioration remain a challenge.

Despite the deterioration in their CLO holdings, BDCs appear to be maintaining their dividends and appear to be in no particular hurry to unload holdings.

One of the biggest challenges in putting new CLO deals together has been the decline in the number of buyers of CLO debt. Justin Plouffe, managing director of U.S. and European CLOs at The Carlyle Group, discusses the means to which managers must adapt to market direction.

U.S. collateralized loan issuance showed encouraging signs of revving up last week as seven U.S. deals hit the market, bringing the final April tally of transactions to 16.

For the first time since the financial crisis, some collateralized loan obligations are being forced to divert funds normally used to pay junior noteholders to be used for the benefit of more senior noteholders.

Onex Credit Partners is launching its first CLO of 2016, and 11th overall, following up a 2015 when the private equity group issued three collateralized loan obligations of mostly similar sizes.

Invesco Senior Secured Management has priced a new $406.25 million CLO with a high ratio of first-lien secured loans already identified for the portfolio.

Credit managers are less pessimistic about widening spreads over the next three months, but are growing more worried about a worsening global corporate default trend, according to the latest quarterly IACPM survey.

The long-time slump in oil prices is negatively affecting a narrow band of CLOs and asset-backed securities invested in energy industry assets. But the lower fuel costs are bringing improved consumer payment performance on mortgages and car loans, according to Moody’s.