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

Structured credit dragged very wide — but CLOs stand to gain
Senior tranches of securitisations widened 220% in less than a month as the coronavirus pandemic has meant an increase in systemic risk — a sharp turnaround from the past few months when idiosyncratic risks were being cited as the main concern for structured credit investors.

SME CLO features PDL mechanism
Details of the groundbreaking Alhambra SME Funding 2019-1 — the first 2.0 CLO backed by loans to small and midsized enterprises — were revealed at the Direct Lending Forum jointly hosted by Creditflux and Debtwire last month.

‘Hoard credit’ says PM as markets swing
As Creditflux went to press, the covid-19 death toll in Italy surged by 700 after two days of slowing, and the US congress agreed a $2 trillion stimulus package.

We’ve got time to work this out
You might think direct lenders are very exposed to economic downturns. But at the Creditflux-Debtwire event last month, managers said they felt they had a few months to rectify problems

We’ve survived before, we can do so again

Credit funds at a glance

A round-up of fundraising and people moves in credit

CLOs at a glance: CLO primary market grinds to a halt
A round-up of CLO performance

Ucits at a glance: Long-short approach lifts Pictet to the top

Fund perfomance: Slowdown for some as pandemic takes hold

Fair Oaks suspends dividends from listed CLO fund citing covid-19 uncertainty
Fair Oaks Capital has suspended dividends on its listed CLO fund “in light of the ongoing uncertainty in economies and markets caused by covid-19 pandemic”, according to an update to investors in the $315 million fund

Fitch puts European and US CLO notes on negative watch after coronavirus stress test
Fitch Ratings has placed six notes from one European CLO, one US static CLO and one US middle market CLO on negative watch, following coronavirus-related stress tests placed last week 

Listed credit fund sheds CLO triple As
Chenavari's listed credit fund, Chenavari Toro Income Fund Limited, has sold European CLO triple A paper to raise cash to answer margin calls related to CLO warehouse and CLO triple A repo exposures

Silver lining: credit investors provided with lower entry points than Q4 2018
Oil shocks and the coronavirus outbreak, along with aftermath effects such as US Federal Reserve interventions and lockdowns, is providing credit investors with lower entry points than the Q4 2018 sell-off, say sources. Furthermore, an expected U-shaped rather than V-shaped recovery could provide a greater money multiple for opportunistic investments - if they can access them 

CVC listed credit fund 'pre-emptively' sheds covid-19 related positions
CVC Credit has taken a conservative approach to addressing covid-19 volatility in its listed opportunistic credit fund, with the fund divesting several credit positions to manage risk 

Direct lenders face ebitda-add back language challenges as borrowers seek flexibility

Beneath the triple C: mighty CLO buckets from Akorns grow
Rating agencies went on a downgrading spree in February, with Moody’s and Standard & Poor’s cutting 20 corporate names to triple C or below – affecting $2.78 billion of paper in US CLOs and €316.6 million in European CLOs. 

Dutch VAT ruling to reduce impacted CLO equity returns by 1 to 2%, says BofA
The Dutch tax authority’s decision to charge a 21% VAT on CLO collateral management fees will have a ‘substantial’ impact on equity, with returns likely to be 1 to 1.2% lower going forward, according to a research paper published by Bank of America

US CLO exposure to oil and gas is 2.6%, finds Barclays
Oil and gas exposure in CLOs is fairly limited, according to Barclays research, as crude oil prices drop to $33 per barrel, down from $41 on Friday

European mid market CLO suffers blip as borrower misses interest payment
Alhambra SME Funding 2019-1 – the first middle market European CLO since the financial crisis – has suffered a setback with one of its portfolio companies missing an interest payment last month

Making arb work of it

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

Dispersion tests hedge fund managers

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.