SCIWire

US CLOs on the up

Thursday 27 July 2017 14:09 London/ 09.09 New York/ 22.09 Tokyo

Activity in the US CLO secondary market is currently on the increase after a quiet July.

"It's been pretty slow for the last few weeks, but it has picked up a bit this week," says one trader. "Overall, the secondary market is very strong and is now trading through primary."

The trader continues: "The relative lack of new issuance is preventing the sourcing of new paper, further hampered by only limited new loan collateral currently being available. Equally, the universe of deals that can be refinanced have for the most part been done, so the refi machine will now have look to re-sets instead. Consequently, secondary spreads remain very tight - there's been no let up there this month."

The uptick in BWIC supply this week has revolved around the bottom of the stack. "We've mainly seen mezz and equity BWICs coming out this week in an attempt to test liquidity," says the trader. "There are quite a few today so we'll really see where things stand by the close."

There are six US CLO BWICs on the calendar for today so far, with equity pieces dominating. The chunkiest list is a $62.95m combination of one single-B, one double-B and six equity tranches due at 10:00 New York time.

It comprises: BALLY 2013-1A SUB, CATLK 2015-2A SUB, COV 2014-2A F, COV 2014-2A SUB, EATON 2014-1A E, EATON 2014-1A INC, MIDO 2015-4A INC and OCT30 2017-1A SUB. Only EATON 2014-1A E has covered on PriceABS in the past three months, last doing so at 93H on 27 June.

27/07/2017 14:09:51