CLO issuance in the U.S. totaled $3.37 billion via seven deals in July, the slowest month for CLOs since July of 2012.
The recent contraction in yields on leveraged loans – the market has rebounded from its June swoon – once again has complicated the arbitrage for new CLOs, putting a damper on new-issue volume, according to LCD’s Kerry Kantin. Sources say the small contingent of triple-A buyers is unwilling to budge after spreads widened earlier this year, while loan yields have snapped tighter in recent weeks: the spread to maturity implied by LCD’s flow-name composite recently was L+424, versus L+449 at the end of June.
Year to date CLO issuance totals $45.7 billion, for a full-year pace of $78 billion. CLO issuance in 2012 was $54.3 billion.