CLOs

The .. also named David Williams as head of U.S. global structured credit solutions capital markets; both executives have been with the firm for over a decade.

Changes that federal regulators are contemplating to the Volcker Rule could pave the way for CLOs to resume investing in high yield bonds, which they currently cannot do without putting themselves off limits to banks.

The volume of "true" new-issue CLOs (excluding reissued deals of existing collateralized loan portfolios) have declined for four consecutive months after February's high-water 2018 mark of $14.7 billion. But JPMorgan maintains its $115 billion-$130 billion annualized forecast.

Exempting CLOs from “skin in the game” rules allows managers to unload more of the risk in these transaction; increasingly, they are doing this by issuing a second tranche of speculative- grade notes.

Default risks in retail and media leveraged loans have also risen to the forefront of CLO manager concerns, which a few years ago were centered on oil and gas exposure.

Despite concerns about credit quality, the only constraints on new issuance appear to be the supply of loan collateral and the capacity of warehouse facilities and rating agencies.

Issuance is strong and defaults remain low; yet CLO market participants are concerned about heavy debt loads of the companies they invest in, as well as the lack of investor protections.

Sean Solis has been a partner at Dechert since 2014, advising collateralized loan obligation managers and arrangers through the hoops on U.S. and European risk-retention regulations.

A continued "oversupply" of CLO deals, along with expectations for new debut or returning managers in the absence of risk-retention requirements, is expected to keep activity flowing.

The closed-end fund, a major investor in CLO equity. directed resets of four deals that it controls in the first quarter; this helped end a yearlong slide in its weighted average portfolio yield.

The commercial real estate lender, which is controlled by Canadian and Singapore sovereign wealth funds, included some unusual features in the deal, such as a two-year revolving period.

According to Morgan Stanley, seven of 15 new European CLOs in the pipeline are debut or re-entry deals involving U.S. asset managers.

The London interbank offered rate has its faults, but at least it compensates for counterparty risk; not so the benchmark being touted as a replacement.

A federal appeals court overturned part of the 2010 law’s risk retention rule earlier this year. The legal battle highlights mistakes to be avoided during the next reform fight.

The average AAA note coupon of 103 basis points above Libor widened from 98.4 in March, which had been the tightest CLO spread level in approximately five years.

“We’re comforted by the fact our position in the market is so strong, and our ability to gain [loan] allocation is quite important," co-CEO Kewsong Lee says.

Hunton Andrews Kurth LLP (formerly Hunton & Williams and Andrews Kurth Kenyon) has named Robert A. Davis Jr. as special counsel in its tax and ERISA practice.

After the second-busiest quarter for primary European CLO issuance to start 2018, a two-week April lull in the market was ended with deal pricings by Intermediate Capital and Investcorp.

Jay Huang, a longtime Citigroup veteran who joined in January, is developing a high-tech trading-desk operation to enhance the company's portfolio of CLO investments.

The total volume of CLO refinancings for the month to date has reachd $11.3 billion, as managers continue to take advantage of the repeal of skin-in-the-game rules for this asset class.