Winner: Natixis

With 18 middle market CLOs arranged during the awards year, 1 October 2021 to 30 September 2022, Natixis is our Arranger of the Year. The firm’s achievement of leading nearly double the number of deals as their nearest rival is borne out of a sector-focused approach.

Christopher Gilbert who is responsible for managing the CLO banking team at Natixis, with a team of 12 bankers and four specialised syndicate professionals says they are really dedicated to the MM CLO sector. “This business is not an add-on to an ABS, leveraged finance or cash management business, this is the front, centre and core of our business and a primary pillar for Natixis,” he says.

Gilbert explains that winning this award is a team effort and he is pleased that his team’s work has received recognition within the market. “We are thrilled to receive this award – there is a great deal of focus, professionalism, dedication, a great deal of work from the team. It is very gratifying to see this recognised – I’m proud of what the team has done and it is nice to see some recognition of our accomplishments and the skill that we bring to the market.”

Natixis has been involved in the sector since the group was formed in 2003. That 19 years of experience allows it to be well-placed to deal with investors, CLO managers and other MM CLO participants.

Gilbert adds: “We have a detailed track record of many managers’ performance. We have extensive experience placing these transactions, and we have a long-term dialogue with investors. We know who is interested in this space and in many cases, we have helped them carry out their initial due diligence as they get up to speed on this market.”

Experts at the organisation explain that deep connectivity with managers and investors is the key to their success. A combination of knowledge, a focus on syndicating positions and distribution as opposed to just lending helps them to be distinguishable players in the MM CLO sector.

“When you have been doing this for many repeat clients for such a long time, there is a level of trust and understanding that translates into long term partnerships. In addition, this leads to private transactions often from the same issuers,” notes Reginald Fernandez, GSCS credit trader and CLO specialist at Natixis.

However, Gilbert explains that despite being successful in winning this award there have been challenges along the way. Like broader markets, things have been difficult since late-February and early-March due to the macroeconomic conditions, such as interest-rates, tightening monetary supply, currency fluctuations and the Ukraine disruption.

“The market has been tough – there has been a reduction in the number of active investors and the obvious widening of pricing since late-Feb to early-March,” he says. “This is not unique to the CLO market but is seen across asset classes.”

During the first part of that period, the market saw a lot of transactions with a great deal of pent-up supply and people with middle market portfolios that wanted to finance in the CLO markets, and there was a lot of money that needed to be deployed in this market.

Gilbert says: “We have been focused on what we do – since the market turned in the first quarter, the environment has been challenging and most deal takes longer. However, we have been successful in placing deals – eight of these deals were completed since the end of Feb. We have remained active during a difficult period. It’s having that deep understanding of our client’s needs.”

Gilbert adds that as we head into a period where people are worried about fundamentals, worried about how credit markets progress and react to the current macro events the increased protection CLOs has given people some comfort. “The experienced manager who issues these – their deep experience is very important; these people can handle complexities.”

Looking ahead, Gilbert says he is keen for his team to continue to display their abilities in the market, and he says that it will be interesting if the market goes into a tricky period, as he is confident that Natixis will emerge as one of the even more dominant players within the market. He observes: “The business is very well-aligned around MM CLOs, and we will be well-positioned to address the market where other players commitment to this space will be tested.”

Fernandez mirrors this view and is confident that the CLO middle market team will be able to address the possible hurdles that could lie ahead. He concludes: “We have been in the market a while; we anticipate more headwinds given the macro backdrop but are confident of working through them and coming out stronger.”

For the full list of winners in this year’s SCI Middle Market CLO Awards click here.