CLO managers show respect to their elders
Alongside lucrative new issues, managers also make time for refinancing and resetting old deals. Our data shows that, in 2021, mid-sized firms were the most effective at this balancing act

A fresh approach to loss distribution
Considering how cash balances change over time, loss distribution models can look very different to conventional thinking. So is your CLO’s pricing based on incorrect assumptions?  

Still plenty more fish in the triple C

2020 CLOs find redemption is sweet
The believers have been vindicated with 2020 CLOs among the best-performing of all time by IRR. Even those that have been reset have been a success with par flushes making for huge equity distributions.

Lighten up, these are due an upgrade
CLO triple C buckets were overflowing last year, but the average exposure is now 7.3%. That is still close to trigger levels, but CLO managers are relaxed, as further loan upgrades are on the horizon

Woah, we’re halfway there
Judging by the 2020 vintage, European CLO overlap is 50%. But varied approaches to holding bonds and the many loans managers turn down mean there are ways for issuers to outperform

Moving fast pays off for hedge funds
2020 was an up and down year in credit, and credit hedge fund managers had to move quickly to capture opportunities from the dislocations that inevitably opened up

We were battered in 2020 — but we weren’t beaten
The CLO industry has survived a year blighted by covid-19. We talk to portfolio managers about the strengths of CLOs and preparations for what was expected to be a ‘cataclysmic’ recession

Elements work against CLO managers in Q3
CLO equity distributions fell in Q3 largely due to factors, such as Libor mismatches, that CLO managers can’t control. But these headwinds could turn in favour of managers in the near future

It’s been a while — how’s tricks?

Managers weigh up matters of principal
CLO managers that were able to avoid OC traps made double-digit equity distributions in Q2, despite the headwinds. But these firms tended not to be among those that built the most par

Loan slump brings managers closer
A 19% slide in new US loan volumes last year has left CLO managers with fewer options in the primary market, and portfolio overlap between US managers has increased to 35.3% on average

A different kind of crisis
Panellists on Creditflux’s US CLO webinar were positive about the robustness of CLO structures and the role of cure contributions. But they warned about zombie defaults and gaming tests

Credit pickers need luck to avoid OC trap
We know what you’re thinking: is my CLO failing its OC test? The truth is, in all this volatility, it can be hard to keep track, unless your deal has high quality liquid loans

 

Lenders DIP their hands in pockets

Star names join Barclays as it pushes into CLOs

Evolving strategy takes Norinchukin close to top spot in CLO investment
Over the years, Nochu has tweaked its cov-lite stipulations, and added mid market and European CLO exposure to its CLO investments. It’s now nearly the market’s biggest investor  

Aircraft lessors: gathering clouds lead to talk of turbulence
Aircraft leasing companies have been cruising over the past two years as passenger numbers grew, but rising interest rates and trade tariff concerns are making some bondholders nervous

Higher leverage is on the horizon - but, for now, take in the MFN sunsets
It’s clear from our analysis of most favoured nation protections and sunsets that strong demand for loans is enabling borrowers to insist on advantageous terms even as they increase leverage

Tastes change in secondary trading
Our analysis of the secondary market shows that, since 2013, appetite for CLOs run by tier one managers persists through market dips and rallies.

Drug makers: desperately seeking pain relief
With Teva’s profitable Copaxone being undermined by cheaper alternatives, the company is in need of a pick-me-up. By Euan Hagger

Tapping Europe doesn't always pay
The premise – reaching a broader audience of investors – is sound. But some managers have found that opting for dual compliant CLOs is not worth the extra effort.

US pensions look beyond equities
US pension funds dramatically lowered their allocations to equity in the decade ending in 2016 as they diversified into illiquid and alternative assets. By Grace Jennings-Edquist

US power generators: Falling prices spark bankruptcies
As renewables and gas undercut traditional power generators, bond holders are preparing for price shocks. By Euan Hagger

Investors prefer direct lending to CLOs
For the first time in the history of Creditflux’s credit allocator survey, investors have voted direct lending the best investment in credit. CLOs came joint second. By Michelle D’souza