Resets and refinancings continue to be the story in the U.S. CLO market, with seven of those transactions last week, compared to just two new vehicles proper, via THL Credit Advisors and Angelo Gordon.
To be sure, a market dominated by refi activity is taking its toll on returns. Despite the record supply of shorter refi paper hitting the market this year, analysts at Morgan Stanley, led by Mia Qian, do not see investors being fairly compensated for the increasingly more typical five-plus year reinvestment periods at the current levels on the senior and junior investment grade tranches.
The recent new issuance brings CLO volume to $3.73 billion this month (as of Friday), and $31.4 billion YTD. At this point last year there was $16.2 billion in CLO vehicles issued.
This analysis is part of LCD’s CLO Weekly Review, by Andrew Park. Along with volume stats and analysis, the Weekly also details
- A U.S./Europe CLO pipelines
- Recently priced CLOs
- Risk-retention, as a share of global market
- AAA spreads/CLO 2.0 spreads
- US/European loan market stats
You can learn more about the CLO market and how it works at LCD’s online market Primer.
This story 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.