CLOs
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Casting a wider net
US CLO managers target European opportunities
Although considerably smaller than the US, the European CLO market is on course for a post-crisis record year. A wave of US CLO managers, many with money to put to work in the wake of risk retention’s repeal back home, are moving across the Atlantic to take advantage of Europe’s growing opportunities.
There were 44 European new issues in 2018 .......
News Analysis 10 October 2018
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Little differentiation
European and US CLO market update
Robust demand is being seen in both the European and US CLO markets this week.
Equity arbitrage is up to 16% in the European CLO market and there is currently a zero percent default rate for some portfolios. “This is an equity investor’s best-case scenario,” says one trader, “short of a crisis situation.”
Spreads have moved up in Europe because .......
Market Reports 9 October 2018
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Market moves - 5 October
New hires and company developments in the structured finance sector
Europe
Apollo Global Management has named Brigitte Posch md, head of emerging markets in London. She was previously global head of emerging markets corporate credit at Barings Asset Management.
Reed Smith has hired Kevin-Paul Deveau as a partner to its financial industry group in London. Deveau joins from Dechert and will focus on advising lenders, general partners, ......
Market Moves 5 October 2018Premium Content
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Heavy supply?
European primary ABS market update
A new RMAC UK non-conforming RMBS has been announced, while the BPCE Home Loans 2018 deal is expected to be sized at almost €1bn. Ford’s latest German Globaldrive auto deal is also attracting some attention in the European primary ABS market.
“The RMAC 2 deal will set the tone for the European ABS market going forward,” says one .......
Market Reports 5 October 2018
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Perfect ingredients
Liquidity boosts Euro CLO pipeline
Increased liquidity and strong demand suggest that the European CLO pipeline will continue to be busy for the rest of the year. Nevertheless, changes in the credit cycle and macro backdrop remain keenly observed.
European CLO market technicals are moving closer towards the US model in terms of providing a greater level of loan market liquidity, according to Sandeep Chana, .......
News Analysis 5 October 2018
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Double counting
US CLO primary market update
Up to 30 US CLO transactions are being prepped in the primary market this week, with four or five seen in the European market.
“In the US you might have maybe 15 transactions at a time and a couple in Europe,” says one trader. “Twice that number in both markets at this time of year is going to .......
Market Reports 4 October 2018
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ABS lull
European ABS primary market update
The European ABS primary market is seeing a lull in activity, which is leaving some traders uncertain as to what the final quarter of the year will bring.
“I’m seeing a little bit of primary market activity, mostly dealer to dealer or seller to dealer,” says one trader. “It’s pretty quiet; I’m not really sure why.”
The .......
Market Reports 3 October 2018
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Market moves - 28 September
The latest hires and company developments in the structured finance market
Canadian pension partnership
Canada Pension Plan Investment Board (CPPIB) announced today that its wholly-owned subsidiary, CPPIB Credit Investments, is broadening its portfolio through new investments in equity tranches of CLOs alongside experienced CLO asset managers. CPPIB Credit’s initial partnership in CLO equity investing will be with Sound Point Capital Management based in New York. CPPIB Credit will invest US$285mn in a .......
Market Moves 28 September 2018
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Weaker pools penalised
US CLO primary market update
The supply of US CLO deals coming off of 2016-vintage refinancings is expected to keep spreads ranging broadly upwards until year-end.
“However, a return of Japanese investors could cause triple-A spreads to tighten - although if and when this will happen is uncertain,” says one trader. “If spreads tighten materially from here, the arbitrage could be threatened and .......
Market Reports 27 September 2018
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Market moves - 21 September
All the latest company developments and new hires in the structured finance sector
Acquisitions
HPS Investment Partners has acquired Tålamod Asset Management. HPS will retain Tålamod's investment team and other employees based in Dallas, while Andersen Fisher, founder and managing member of Tålamod, will join HPS as md. Kyle Mapes and Jay Steen will join HPS as executive directors, after joining Tålamod in 2008. All employees of Tålamod will become HPS employees .......
Market Moves 21 September 2018
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Widening spreads eyed
US CDO secondary market update
Several ABS CDO bonds are expected to be in high demand today, which have not been prevalent on the secondary market for several months. Trups CDO paper has been more common on BWICs.
“When Trups CDO bonds come around, there is a lot of interest,” says one trader. “But they are not predictable, unfortunately.”
Meanwhile, mezzanine CLO .......
Market Reports 20 September 2018
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Irish RMBS focus
European ABS market update
A rare Irish non-conforming RMBS has caught the attention of European ABS market participants, following the deal’s roadshow last week.
“The Dublin Bay Securities senior notes are being talked at around 65bp, with the deal expected to price soon,” says a trader. “In comparison, proper prime senior RMBS paper would typically price at around 12bp or 13bp.”
Market Reports 18 September 2018
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SCI Start the week - 17 September
A look at the major activity in structured finance over the past seven days
Pipeline
ABS is still dominating the pipeline, with several deals coming from the auto space.
These include: US$534.032m ARI Fleet Lease Trust 2018-B, US$1.362bn GM Financial Automobile Leasing 2018-3, US$327.87m Navistar Financial Dealer Note Master Owner Trust II 2018-1, US$407.83m Prestige Auto Receivables Trust 2018-1
In non-auto ABS there are also a number of transactions waiting to price: US$809.93m CNH .......
News 17 September 2018
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Preference for yield
Conference delays new issues
The US ABS secondary market is seeing a big demand for higher-yielding sectors like renewables, even if it means giving up liquidity, according to market sources.
According to one trader, firms are also holding off from bringing new issues because of ABS East, resulting in a market slow down until the conference.
The source adds however that many deals are .......
Market Reports 14 September 2018
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Market moves - 14 September
New hires and company developments in the structured finance sector
CDS ETF Launched
Tabula has launched a European CDS ETF which offers passive exposure to European credit through an index tracking the corporate CDS market.
CMBS downgrade review
Moody’s has placed on review for downgrade all the notes in the UK CMBS Housing Association notes issued by Finance for Residential Social Housing (FRESH), affecting approximately £932m .......
Market Moves 14 September 2018
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Euro ABS activity surges
Investors finding value across asset classes
The ABS secondary market has been very BWIC driven with large volumes coming through. A Greek RMBS is also attracting attention amid a greater focus on European ABS.
A trader comments on ABS activity in Europe: “The most interesting thing I’ve been seeing is the large Grifonas RMBS. The senior, now sized at around €345m, has been on BWICs for two .......
Market Reports 14 September 2018
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US CLO reissue caution advised
US CLO arrangers are being cautious in terms of how they bring and announce actions in the next two months.
“Investors know there’s lots of deals getting done in September and October, so there are a lot which are not being announced or are being done in secret,” says a trader.
Many deals made in the last week are being .......
Market Reports 13 September 2018
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US CLO secondary spikes
The US CLO market is seeing a big spike in secondary market activity this week ahead of ABS East and expected reset activity.
“There’s over US$500m on BWICs today”, says a trader, “which is the busiest day in several months. I would guess it’s because of the ABS east conference on the following Monday…people are trying to get stuff done before .......
Market Reports 12 September 2018
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Short duration in demand
Spreads diverge between long and short CLO paper
The volume of US paper in the secondary CLO market is down in the first week of September, with spreads diverging between long and short paper.
“At this stage,” says a trader, “it’s hard to find short paper as people don’t want to sell it because it’s very competitive to buy. For the longer paper spreads are widening .......
Market Reports 11 September 2018
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Market moves - 7 September
New hires and company developments in the structured finance industry
CRT expert wanted
Banca IMI is hiring a senior risk transfer solutions structure for its Milan office. The bank wants a candidate with experience in capital markets and investment banking with a top tier Italian or European investment bank, consultancy firm, rating agency, fund or asset manager and ideally with experience of origination activities and analysis experience of tier one .......
Market Moves 7 September 2018
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Increased obligations weighed
ESMA outlines expanded reporting requirements
ESMA last month published final draft technical standards on the new reporting requirements to be implemented under the Securitisation Regulation (SCI 24 August). The standards - released ahead of the 1 January deadline - are set to usher in new levels of due diligence required on the part of the seller, meaning investors will expect more information to .......
News Analysis 6 September 2018