Weren’t there more of us than this?
According to this year’s Creditflux CLO Census, the CLO industry is not feeling optimistic. Some investors have vanished and managers have not taken advantage of helpful market conditions

What matters is what you do with it
CLO managers yearn for flexibility so they can take advantage when credit sells off. But it isn’t enough on its own: triple C-flex CLOs saw portfolios erode this year, while CBOs outperformed

We can cope with downgrades again

Can someone call the triple A? We’ve stalled
CLO issuers are in need of AAA roadside assistance. Despite the emergence of new buyers, a lack of senior CLO investors — particularly US banks — has brought the primary market to a halt  

We’re drifting apart
Everyone’s issuing US CLOs these days and it is tempting to believe the crowd of managers is blending into one. However, overall portfolio overlap has dropped to 37.7% across 2021 CLOs  

Arb work pays off
With day-one arbitrage alone delivering projected CLO cash-on-cash returns of 20-25%, 2021 may have been the best year ever for equity investors — at least until CLO spreads began to widen  

HY fund is exception to rule of CLOs
CLO funds have had back-to-back years of outperformance versus credit, proving the asset class is a great place to invest, rain or shine. But a Wasserstein HY fund was the star performer in 2021  

I’ll see your 2020 and raise you 2021
Discounted loans, Libor floors and bond flexibility helped make 2021 an even better year for CLO returns than 2020, as US CLOs distributed 15.54% and European CLOs paid 13.93% annualised

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?  

These CLO docs could be better
It seems there’s not much to worry about if you’re in the CLO market. In Creditflux’s CLO Census, voters said docs should follow a template as Jefferies, AGL and Hayfin emerge as rising stars

Refi deluge casts shadow on b-wics

Still plenty more fish in the triple C

The growing role of data in CLO management
The complexity of managing a CLO has made it as much an art as a science, but new technologies are sweeping into the market, according to speakers on a Virtus roundtable discussion.

An alternative way of looking at CLO overlap
Analysing CLO collateral to look for overlap is critical for any CLO investor, but it is normally done either within a portfolio of CLOs or by bilaterally comparing two managers. In one of its latest research pieces, Moody’s Analytics has taken a different approach

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.

Coronavirus tiers up old ranking script
Forget everything you thought you knew about CLO manager tiers. Apollo and Blackstone are mainstays, but smaller, more nimble issuers are finding new ways to stand out from the crowd

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

CLOs come up smelling of roses
The coronavirus crisis could have cut back 10 years of CLO market progress, but investors’ foresight, trading chops and flexibility meant many saw their strategies blossom during 2020  

CLOs wheel and deal as overlap increases
2020 CLOs are a different breed to any other vintage. But this cohort features an overlap of almost 40% as CLO issuers have been forced to focus almost entirely on secondary market loans

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

Answering the “what if?” question
CLOs can be complex, and efficiently calculating trading scenarios even more complex. But new tools are available to help managers quickly model hypothetical scenarios

Waiting for afters
Day one arb remains important, but last year there were opportunities aplenty in the secondary market, which put the onus on printing CLOs and waiting for the day after non-call periods expired

At least 2020 wasn’t dreadful for CLOs
Last year’s downturn was another in which CLOs survived and in many cases thrived as active management and Libor floors helped managers deliver 13%-plus returns to equity