SCIWire

Euro CLOs carry on

Thursday 20 July 2017 09:56 London/ 04.56 New York/ 17.56 Tokyo

The European CLO secondary market is carrying on in the face of the earlier than usual secondary market summer slowdown across other securitisation asset classes either side of the Atlantic.

"Overall things are ticking along and given it's the summer we're still doing decent volumes this month so far," says one trader. "However, the market remains dominated by primary in terms of both new issues and refis. There is activity in re-sets too, but we're seeing some fatigue there as the arb is currently not so great."

The trader continues: "Sourcing bonds remains difficult and dealers are very light so the majority of paper is trading well, though we are starting to see some manager disparity. Currently the weakest bid and the least investor interest is in 1.0 lower double-Bs. Conversely, 2.0s that can be refinanced or re-set, so triple-Bs and above, are trading very tight."

Current patterns could easily drift on throughout the remainder of the summer with flows tapering off through August. However, the trader notes: "With typically thin seasonal liquidity it will only take one big piece of news from the loan market to shift prices and potentially generate a large number of BWICs."

There are currently four European CLO BWICs on today's schedule. Three involve one or two lines, while the longest is a collection of small-sized single-Bs due at 14:30 London time.

The €9.85m 15 line list comprises: ARBR 4X F, AVOCA 16X F, AVOCA 17X F, BABSE 2014-2X FR, BABSE 2016-1X F, BECLO 2X F, BECLO 3X F, CGMSE 2015-3X E, CORDA 8X F, EGLXY 2015-4X FR, JUBIL 2015-16X F, NEWH 2X F, OHECP 2015-4X F, OHECP 2016-5X F and TIKEH 2X F. Four of the bonds have covered on PriceABS in the past three months - AVOCA 17X F at 98.87 on 27 June; BECLO 2X F at 98.74 on 23 May; CGMSE 2015-3X E at 97.875 on 25 May; and CORDA 8X F at 101H on 29 June.

20/07/2017 09:56:57