Issuance of U.S. collateralized loan obligation vehicles in June shot to $15 billion, the most since March 2015, according to LCD. With the recent activity, 2017 U.S. CLO issuance, through June, totals a healthy $52.5 billion, compared to just $26.2 billion at this point in 2016.
The June surge has prompted a number of Wall Street banks to up their estimate of full-year CLO activity. Morgan Stanley, for instance, recently increased its CLO expectations to $80 billion from the $70 billion it predicted earlier this year (and the increased estimate was made before a late-June spasm of issuance).
The surge in activity comes despite a stubbornly yield-challenged market which saw pricing in numerous corners of the CLO segment remain low.
CLOs are an increasingly important part of the leveraged loan investor universe. Indeed, the share of outstanding U.S. leveraged loans now held by CLOs recently hit 65%, according to LCD. That’s the most since the relatively formative days of the loan market, in 2002. – Staff reports
This story is taken from analysis which first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.