CLOs

The coronavirus impact in the U.,S. alone has resulted in a 30% year-over-year decline across securitizations, CLOs and MBS.

The big drop in CLO equity this year signals investor fear that this downturn will be more like the 1998 to 2003 period, where company defaults rise and stay elevated over the course of years, and profiting from improving prices in loans is hard.

he report concluded that the industry should fare well compared with its peers, but that loans to mid-sized European companies remained vulnerable to fall-out from Covid-19.

If creditors can now be pushed down the repayment pecking order without notice and have no recourse to fight back, they will be forced to reassess risk – and potentially demand higher interest rates – when granting loans and buying certain kinds of bonds.

The market for private investing has seen assets swell 44% over the past five years, reaching an estimated $18 trillion by the end of 2019, according to JPMorgan Chase & Co. Globally, alternative asset managers have $2.4 trillion available to spend, based on data from Preqin.

King Street's new CLO is the first European deal rated by Moody’s to fail to meet all the portfolio requirements at this milestone.

Money managers including Owl Rock Partners, Pretium and PGIM are racing to add workers with restructuring and bankruptcy experience as they take in record amounts of cash to buy cheap assets battered by the economic fallout of the coronavirus pandemic.

An article in The Atlantic warning that collateralized loan obligations will be banks’ next downfall overestimates the risk of these securities.

Restricted from taking on distressed debt or debtor-in-possession loans, CLO managers are being left out of opportunities in coronavirus-related debt restructurings. "It's frustrating," says one manager. "We are supposed to be the bully, not the one being pushed around.”

Longstanding CLO manager Western Asset Management just priced its first deal of 2020, and despite the transaction's much more conservative structure, spreads doubled from its deal a year earlier.

The breakdown, described by people with knowledge of the relationship, is among the many scuffles emerging on Wall Street as the coronavirus pandemic pits distressed companies and their owners against lenders.

Four transactions from three managers, Alcentra, Barings and Bardin Hill, showed a breach of one or more of their so-called over-collateralization tests based on May filings.

Bain joins firms like Blackstone Group Inc., Oaktree Capital Group LLC and Carlyle Group Inc. in looking to capitalize on potential opportunities created by the coronavirus pandemic that has hammered businesses.

Leveraged loans and collateralized loan obligations do not represent an "existential" threat to the global economy or to the U.S. banking system, as some recent highly charged reports have suggested.

There are any number of reasons to fret about America’s recovery from the coronavirus crisis. A repeat financial collapse at the hands of a structured product with a similar sounding acronym isn’t one of them.

The subprime mortgage meltdown turned Pacific Investment Management Co. off the CLO business for a decade. Now the coronavirus crisis is luring it back.

The firm will offload parts of its business including its business development company, Garrison Capital Inc., and other credit vehicles.

Fitch Ratings is evaluating all 59 middle-market collateralized loan obligations it rates for potential downgrades, over concerns of the ability of small-business borrowers to support loan payments under COVID-19 stresses.

Credit deterioration is slowing in broadly syndicated CLOs – but a large percentage of deals are still failing certain performance tests under the weight of underlying asset downgrades and lower payment flows from obligors.

“Since April, the decline in corporate credit has resulted in a significant number of downgrades among the assets underlying some CLOs,” a Moody’s press release stated on Wednesday.