Investors need to ask: can my asset manager survive the crisis?

The opportunities to build par and spread within a CLO haven’t been this plentiful since 2009
Last year’s CLOs could become the benchmark for manager performance

Points up front: Despite the fees, European SME CLOs are the future
Producing the first post-crisis securitisation of small and mid-sized European loans was a monumental effort for Be-Spoke Capital.

Distressed exchanges offer pathways to recapture value that others are trying to take from CLOs
Volcker rule amendments could protect CLOs from losing out to distressed funds in a restructuring

They said it: "How about a carbon reduction covenant?"
In a social media post, Bfinance’s Trevor Castledine recalls a conversation with a private debt manager who claimed to be powerless when it comes to influencing borrowers over ESG. The lender’s response was: “Er…”

Past returns: Seven-year wait for equity payment
Five years ago we reported that equity investors in three legacy PGIM CLOs received a total of €1.1 million in distributions — seven years late. 

Past returns: the genesis of managed CSOs
Five years ago, we reported that managed CSOs were being discussed for the first time since the financial crisis.

Points up front: Betting on ESG CLOs
Investing ethically is becoming a big part of credit, with CLO managers among the first to adopt environmental, social and governance (ESG) investment guidelines. So it’s no surprise that ESG criteria were high on the list of talking points at the Structured Finance Association’s SFVegas gathering last month.

Points up front: Credit picking follows on from investor picking
Credit picking skills will be important this year amid heightened idiosyncratic risk, so everyone seems to say. But Ares Management, one of the biggest names in direct lending, has demonstrated that asset managers can also be picky with the mandates they take on, when the firm walked away from a private debt mandate with London CIV in January.

2020 will be about relative value, watching for idiosyncratic risk and a good deal of running away
Investors must embrace change — it’s time for structured credit investors to look beyond vanilla CLOs

New accounting rules could be the axe that decapitates zombie credits

Points up front: Swiss CLO manager is regular as clockwork
The Swiss are known for their meticulous timekeeping and punctuality, so it’s perhaps no surprise that an asset manager based in Zug is crafting a reputation as the most efficient in the CLO market.

You need a balanced portfolio that’s ready for calculated risk taking — so consider a barbell approach
Investors can’t afford to be too conservative as they prepare for the end of the cycle

It's imperative to remain in liquid assets and this makes CDS indices attractive

Don’t get too comfortable. The truth is there are hundreds of things that could be catalysts for a sell-off
Just because there’s no obvious sign of a sell-off, doesn’t mean it’s not going to happen. Often, market moves defy logic

‘Buying the dip’ is going to be a poor investment strategy when the next downturn comes
The next credit downturn will be shallower but more prolonged than the last, so what works will be different, too

Not all old tier one CLO managers lived up to their premier billing

Farewell Mike
After two decades, Mike Peterson, the founder and long-time editor of Creditflux, is moving on.

Points up front: There are lies, damn lies and awards pitches
We’re hearing empty boasts, trash talking of their rivals and no shortage of promises that will absolutely be delivered.

In private credit, we look to stay in senior structures with control

Analysts have interpreted the IG credit risk premium in various ways — but the point is to harvest it
Selling CDS protection could be the most effective way of capturing excess premiums in investment grade credit

They said it: "Risky unmarked things are not not-risky. It will end in tears"

Past returns: Bond king’s exit ends CLO refis
Five years ago in Creditflux, we reported on a market absorbing the consequences of ‘bond king’ Bill Gross leaving Pimco, the firm he co-founded.

It may seem a bit rich for Welshcake to tell staid CLO investors they need to be more sensible
Bespokes are the next big thing — and you’d be wise to get involved