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LMA Survey: European CLO issuance likely €10-15B in 2015

The LMA today released the results of its survey on the outlook for the syndicated loan market over the next 12 months. A summary of the key points follows, and the survey can be found here.

Competitive pressure in the market, and global geopolitical and/or economic risks, are the top-two respectively when it comes to factors people think will most influence the syndicated loan market over the next 12 months, according to the survey, while corporate M&A, followed by refinancings, are likely to present the best opportunities over the same timeframe.

As for syndicate loan volume expectations, just under half those surveyed believe there will be an up to 10% increase in volume, and 42% think it will be unchanged. Meanwhile, 47% forecast CLO issuance volumes will be in the €10-15 billion range.

Looking back at this year, increased investor appetite is identified as the greatest influence on secondary market liquidity, according to the poll. Sticking with secondary, 45% of respondents expect buyside appetite will not be matched by primary supply, and that liquidity will be deal-specific next year.

When it comes to the main barrier to developing market lending at the present time, the LMA found a close split between those citing legal uncertainty and inconsistent regional integration, while the primary factor driving developing market investment is widely seen to be the search for yield.

The survey garnered a disparity of views on where the property cycle is in Europe, while it found debt funds are likely to demonstrate the greatest growth in real-estate lending in 2015. – Staff Reports

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CLO roundup: U.S. supply beats forecasts, Europe nears upper limit

CLO activity in the U.S. was curtailed by the Thanksgiving holiday, with just three U.S. CLOs pricing last week.

Europe managed two transactions, but the primary pipeline is hampered by waning investor appetite and widening liability spreads.

As a result, global issuance has risen to $132.87 billion, according to LCD.

Ahead of the Thanksgiving break, arrangers were focused on getting those deals priced that they could, and lining up further transactions for this week once the market returns. New-issue activity will be on hold again early next week as players head to Dana Point, Calif. for Opal’s CLO Summit this weekend.

LCD subscribers can click here for full story, analysis, and the following charts:

  • Deal pipeline
  • US arbitrage CLO issuance and institutional loan volume
  • European arbitrage CLO issuance and institutional loan volume

– Sarah Husband

Follow Sarah on Twitter for the latest CLO market news and insight.

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LSTA files suit against Fed, SEC over CLO risk retention

The Loan Syndications and Trading Association (LSTA) has filed a lawsuit against the Federal Reserve and the Securities Exchange Commission over the final risk-retention-rule release last month.

The petition for review, filed Nov. 10, alleges the final rule is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”

The petition for review represents the first step in legal proceedings that the LSTA has taken against regulators in an effort to provide the CLO market with relief from the final risk-retention rule, which will require CLO managers to retain 5% of the deal. It is expected to take effect in about two years.

The LSTA said it filed the suit “reluctantly” and as a last resort. “The LSTA believes the regulatory agencies’ one-size-fits-all solution to risk retention with respect to collateralized loan obligations (CLOs) disproportionately punishes an industry that was not involved in the financial crisis, suffered practically no losses and currently provides critical financing to over 1,000 non-investment-grade companies,” LSTA executive director Bram Smith said in a statement.

“We have sought a reasonable solution for years and worked tirelessly to provide the agencies with workable and practical options because we believe the negative impact of the risk-retention rule on the CLO market and broader economy will be significant,” Smith added. “None of our material proposals were implemented into the rule.” – Kerry Kantin

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CLO roundup: Pricing schedule stays busy as European spreads widen

CLO roundup 2014-11-10 chart 3

Last week was an active one for the U.S. as market players looked to price CLO transactions ahead of the shortened Thanksgiving week. In Europe, meanwhile, November saw its first two pricings last week ahead of what could be a busy push into year-end. The big question, however, is whether widening liability spreads in Europe will lead some issuers to put transactions on hold until 2015.

Global issuance stands at $130.77 billion, according to LCD.

LCD subscribers can click here for full story, analysis, and the following charts:

  • Deal pipeline
  • US arbitrage CLO issuance and institutional loan volume
  • European arbitrage CLO issuance and institutional loan volume

– Sarah Husband

Follow Sarah on Twitter for the latest CLO market news and insight.

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Highland Capital hires Smith to business development team with CLO focus

Highland_Capital_Management_597435_i0Highland Capital Management has hired Felicia Smith as managing director to its business development team. She will be responsible for identifying and developing new relationships with institutional clients, with a particular focus on raising assets for Highland’s CLO and credit platforms.

Based in Dallas, TX., Smith will report to Josh Terry, head of structured products and trading for Highland Capital Management.

Smith joins Highland from Santander Consumer USA (SCUSA), where she served as vice president of capital markets, and prior to SCUSA Smith worked in sales and trading at J.P. Morgan Chase, and as an analyst at J.P. Morgan Private Bank.

Highland Capital Management is an SEC-registered investment adviser which, together with its affiliates, has roughly $19 billion of assets under management. – Staff reports

 

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Crestline Investors partners with Denali to expand loan, CLO business

crestlineCrestline Investors announced today that it has partnered with Denali Capital to expand a CLO platform under the broader Crestline suite of investment products. The business will operate under the name Crestline Denali Capital.

Denali has had a relationship with the principals of Crestline since it began operating in 2001. “The new alliance adds a well-established CLO manager to the Crestline family of product offerings and utilizes Denali Capital’s expertise in sourcing and managing syndicated senior loans and related assets for the purpose of structuring and managing high-quality CLOs and other funds,” the firms said in a statement.

Under the new agreement, Crestline will sponsor a series of new CLOs, the first of which it said is underway, to be managed by Crestline Denali Capital. The firm will also position itself to pursue other investment strategies in the loan asset class.

Fort Worth, Texas-based Crestline is an alternative investment management firm, which manages about $8 billion in client assets across separately managed accounts and commingled funds for institutional investors.

Oak Brook, Ill.-based Denali currently has approximately $1.5 billion of assets under management through various funds, mainly CLOs. – Staff reports

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Leveraged Loans: US braces for risk retention as volatility hits – CLOs

CLO roundup 2014-10-20 chart 1

Broader market volatility gave the CLO market cause for concern last week with widening liability spreads threatening to disrupt the new-issue pipeline over the coming weeks. Still, for others, the sharp drop in loan prices created opportunity, with one of last week’s transactions widely rumoured to be a print and sprint. This week should again be eventful with two industry conferences and the anticipated release of the U.S. risk retention rules.

Against this backdrop, U.S. CLO new-issue volume in the year-to-date rose to $101.01 billion by the end of the week, from 187 deals, according to LCD. During the same period a year ago the market had issued $61.42 billion from 127 CLOs. – Staff Reports

For more news, analysis, and data on the leveraged loan market and CLO segment check out or Loan Market Primer.

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Onex Credit Partners launches European platform with Baker hire

ONEXOnex Corporation announced today that Stephen Baker will join the Onex Credit Partners team as it establishes a London office to expand the platform to Europe. Initially, the platform will focus on placement of European CLOs.

Onex Credit manages approximately $4.7 billion through several debt strategies. Onex Credit recently completed its largest CLO to date, offering approximately $1 billion in securities and loans in a private-placement transaction believed to be the first broadly syndicated U.S.-dollar CLO structured to comply with European risk-retention requirements.

Prior to joining Onex Credit, Baker was based in London as a senior portfolio manager with CQS, and has also held senior leadership roles in leveraged credit, syndications, and corporate finance with Scotia Capital, Bank of America, Barclays, and Canadian Imperial Bank of Commerce.

Private equity firm Onex Corporation has offices in Toronto, New York, and London. At Onex Credit Partners, Onex manages and invests in leveraged loans, CLOs, and other credit securities. The company has roughly $22 billion of assets under management, including $6 billion of Onex capital, in private equity and credit securities. Onex invests its capital directly and as the largest limited partner in each of its funds. – Sarah Husband

Follow Sarah on Twitter for the latest CLO market news and insight.

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CVP and Macquarie enter agreement to issue CLOs

Credit Value Partners, LP and Macquarie Group are collaborating on the creation of a series of CLOs, according to a company statement.

Under the arrangement, Macquarie will provide equity capital, warehouse financing facilities, and structured credit expertise toward the creation of these CLOs.

The CLOs are expected to be comprised mainly of institutional leveraged loans and will be managed by CVP.

The arrangement benefits CLO investors through the combined expertise of CVP and Macquarie in investment management, origination and structured credit.

In addition, the availability of equity capital financing from Macquarie could help with the risk-retention regulation when it comes into effect.

The strategy mirrors a similar arrangement established between Macquarie and Sound Harbor last October.

The arrangement does not prevent CVP from doing CLOs with other equity providers.

CVP, based in Greenwich, Conn., specializes in managing portfolios of high-yielding corporate loans and opportunistic credit investments, with over $1.75 billion of regulatory assets under management. The CVP team was formed within Credit Suisse Asset Management Group in 2008 and became an independent firm in 2010. CVP is led by Don Pollard, and the firm’s CLO platform is headed by Joe Matteo.

The firm priced its CVP Cascade CLO-2 in July this year via Credit Suisse, marking the manager’s second U.S. CLO under management. –Sarah Husband

Follow Sarah on Twitter for the latest CLO market news and insight.

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CLO roundup: U.S. nears volume record as Europe AAAs see new low

The CLO market returned to form last week as eight managers printed deals in the U.S. and Europe, for a total of $3.88 billion, according to LCD. Of this, the U.S. priced six for $2.8 billion, while Europe priced two for just over $1 billion. Global volume stands at $110.56 billion in the year to date, according to LCD.

Year-to-date issuance in the U.S. is $95.87 billion from 177 deals, nearing the all-time high of $97.01 billion in 2006. Given the near-term pipeline, which holds at least six CLOs for roughly $3 billion, it’s highly likely the record will be broken this week. In the same period last year, issuance stood at $60 billion from 124 deals.

LCD subscribers can click here for full story, analysis, and the following charts:

  • Recent deals
  • European arbitrage CLO issuance and institutional loan volume
  • Deal pipeline
  • Global CLO volume


. - Sarah Husband

Follow Sarah on Twitter for the latest CLO market news and insight.