CLOs

Regional banks may soon favor CLOs again while proposed rules could draw banks to the market long-term.

Twenty-five years after its first CLO, Barings' securitizes its 100th transaction, this time securitizing middle-market private credit.

More than $4 billion of collateralized loan obligations on commercial real estate received a modification in the three-month period, compared with about $1 billion in the first quarter

Par subordination on the 'AAA'-rated notes was 39.95%, while par subordination on the 'BBB' notes are expected to be 14.36%.

An industry organization is relieved as the regulators extend an exemption to CLOs, but they remain vigilant for how the new order will ripple through the market.

Looking to insurers for growth, the asset managers seek NAIC look-through to lower risk-based capital.

That's pushed secondary leveraged loan prices near highs not seen in months as investors flush with cash seek out supply, leading borrowers to stream into both loan and junk bond markets.

The notice is a precursor to a reset deal, a type of refinancing that can extend the life of CLOs for years.

Junior tranches are at the heart of the debate around whether the capital that insurers currently hold against CLOs is sufficient, and the NAIC may soon impose stiffer risk-based capital requirements.

Resetting allows CLOs to essentially cut the costs at which they borrow, leaving more money for holders of the riskiest and highest-returning part of the structure, the equity portion, after other note holders have been paid.

Partners in ABS practice also discuss how CLOs face final bridge to cross as Libor transition approaches the finish line.

CLO spreads should tighten toward year-end, easing arbitrage challenges. Meanwhile investors will be challenged to calibrate the recovery rate, says Pratik Gupta.

One case found that simply defining the investment in the new debt as an allowable transaction was helpful, but new indenture language to facilitate participation provides CLOs with little benefit.

Direct lenders are trying to get their hands on consumer loans, cutting into banks' business and taking advantage of the sometimes volatile market for asset-backed debt.

The pool will have an average senior overcollateralization cushion of 10.33%. Overall, however, the portfolio has a lower WA spread and lower available excess spread, which it says indicates a weaker underlying portfolio.

The senior, triple-A rated notes, which is in the A-1B class, are expected to have a 210 basis point spread, with a 38% credit enhancement level.

In a sign of how Japan's influence has grown, its regional banks have become a go-to buyer in the $1.3 trillion market — an important source of financing for junk-rated U.S. companies.

Demand for AAAs is still challenged as banks, the biggest buyers, are facing too much uncertainty and volatility around their balance sheets.

Despite dearth of new loans, retail investors' exit from loan funds provides CLOs with new-issue supply.

BlackRock's Financial Markets Advisory group has been selling off securities over the last two weeks, including pieces of collateralized loan obligations, commercial mortgage bonds and niche asset backed debt.