This week we cover CLO Review & Preview, Secondary Loan Market Recap & Loan Market Holiday
As of Thursday mid-day, the U.S. CLO market continued to await its first new deal of 2018. There is in fact a large pipeline of new CLOs, but they are competing against a number of resets trying to get done by the January payment date, LCD noted. Happily, this respite gives us time to reflect on 2017, recap the major trends, contemplate the evolution (or revolution) in the CLO market and consider what may be on tap for 2018 and beyond.
After we all feared that risk retention would materially hamstring the CLO market, 2017 has gone in a rather different direction. In fact, with several work weeks remaining this year, new 2017 U.S. CLO issuance has hit $107 billion, edging past 2007 to become the second most active year on record. And that’s just if one considers new issuance.
Last week, new U.S. CLO issuance climbed past $100 billion and this week, it’s aiming for $105 billion. And this understates actual activity as there also has been $95 billion of refinancing activity and $45 billion of resets, according to Deutsche Bank stats. According to LCD, the market is up 80% relative to 2016. And, with about four weeks of actual worktime remaining, 2017 is not that far off from 2014’s record $124 billion. But will we get there? Probably not, say CLO analysts. BAML, Deutsche Bank and Nomura all have their updated 2017 CLO forecasts in the $110 billion context.
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