PGIM defers April European CLO equity payments
PGIM has deferred scheduled April payments to equity investors of its European CLOs, the first European CLO manager to defer a payment date during the coronavirus pandemic

Beneath the triple C: April showers send buckets overboard
Downgrade waves rocked the CLO market in April as Moody's and Standard & Poor's downgraded 135 corporate borrowers to triple C or below, from ratings above that level. The downgrades put CLOs in rough waters as $41.6 billion of such loans are prevalent in US CLOs while €5.64 are moored in European CLO portfolios – affecting 5.92% of the US market and 4.37% of the European market

Where are the gloating I-told-you-so columnists who claimed CLOs would bring global destruction?
We have seen a measured response to the coronavirus crisis: fund managers aren’t collapsing and investors are not shunning CLOs

Liquidity is king. A company with a sound long-term value proposition may not last the next few weeks
For borrowers — and credit providers seeing revolvers drawn down — liquidity is the greatest concern

Sculptor doubles global credit exposure in master fund amid dislocation
Sculptor Capital Management has doubled its global credit exposure in its Master Fund during the covid-19 volatility, according to the firm’s Q1 earnings call

CSOs are hurting but will emerge stronger, say sources
It is unsurprising that bespoke synthetic tranches have suffered during the covid-19 crisis, as they are backed largely by real money investors that have gone outright long credit risk. But more noteworthy and reassuring, say sources, is that most have held firm in their positions and look set to stick with the asset class — in contrast to the 2008 global financial crisis exodus

Waiting game pays off for European pension fund
Finnish pension fund Ilmarinen has been investing more in European CLO tranches after valuations dipped to their lowest levels in a decade, thanks to a distressed CLO fund strategy it put in place two years ago.

Looming CLO downgrades will not force insurers to sell despite seven-point trading basis
Insurance companies are unlikely to be big sellers of CLO paper, despite the threat of mass downgrades as rating agencies last month put over 1,000 global CLO tranches on negative watch

CLO managers seek to defer and redirect equity distributions
Half of US CLOs are due to miss equity payments as downgrades and defaults resulting from the lockdown economy trigger overcollateralisation breaches across the market, according to the latest bank research estimates. But some managers are being granted the flexibility to redeploy cash

KKR takes covid-19 hit on flagship credit funds and lev fin
KKR took a 16% hit to returns on its alternative credit flagship funds amid the first quarter coronavirus downturn and a 13% loss on leveraged credit, taking these into negative territory for the last 12 months. The firm's private equity portfolio also slumped by 12%

Ares raises $3 billion special situations fund ahead of huge European direct lending launch
Ares Management has witnessed “accelerated fundraising” for its special situations fund, which it has closed at around $3 billion, according to the firm’s earnings calls. The firm also launched its fifth European direct lending fund this week, which Ares expects could be “the largest private comingled fund in its history”

Flex CLOs tap mass downgrades to fill big triple C buckets
CLO managers are being hampered by the sheer volume of corporate credit downgrades to triple C, leaving the small cluster of triple C-flex CLOs to capitalise

Creditflux announces finalists for online CLO awards
Creditflux is pleased to announce the finalists for a new-look manager awards event, which will be hosted online for the first time.

Past returns: Death by triple Cs? A step too far
15 months ago in Creditflux we reported that corporate credit downgrades, rather than defaults, were the biggest problem facing CLO portfolio managers

Points up front: Liquidating CLO can’t escape Standard & Poor’s
With over 1,000 CLO tranches on watch across the big three rating agencies, it’s good to see rigorous standards are being maintained and little things like CLO liquidation are not excusing deals from detailed scrutiny

Skew trades bloom in winter for credit
March fund returns submitted to Creditflux in April were poor, but one manager distinguished itself in the covid-19 dislocation using a synthetic strategy rarely seen since the 2008 financial

Managers vie for trophies at new-look awards event
The 2020 Creditflux Manager Awards will take on a fresh complexion as we transition to a virtual event. But some things will never change: our finalists have been assessed using data alone
 

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

 

Credit hedge fund returns: March 2020 stats
Monthly performance across credit hedge funds

Fund performance: Index tranche investors make it work from home
March brought a drastic drop in return figures as covid-19 swept across the globe, as Orchard tops the Creditflux performance tables

Ucits at a glance: Long-short credit capitalises on coronavirus
Ucits funds were not spared from the crash in mid-March, but Pictet outperforms

Covid-19 'perfect storm' for European CLOs, but they're 'showing strength', says S&P
S&P Ratings has described European CLOs as 'showing strength' amid the covid-19 pandemic

Correction: Orchard Liquid Credit Fund performance
In the May issue of the Creditflux magazine we incorrectly stated in our performance tables the year-to-date return for Orchard Liquid Credit Fund, which is up 10.66%

Invesco suffers Moody's downgrade after struggling to delever balance sheet
Moody's has downgraded Invesco Ltd from A2 to A3 citing the "challenges Invesco has faced delevering its balance sheet following the acquisition of Oppenheimer Funds", the rating agency said in a notice

'Nochu covenant' leaves big CLO managers in a trading bind
Stipulations pushed into CLOs by the world’s largest CLO investor Norinchukin to limit its exposure to covenant-lite loans are causing headaches for managers on its approved list hoping to use the dislocation to build par