Market Survey: Will new issue CLOs reach US$140bn this year?

Roughly one third of the CLO managers, arrangers, and investors across the stack surveyed by Thomson Reuters LPC said CLO issuance will be US$110bn this year, while another third said US$120bn and 10% said new issue CLOs will reach US$130bn, which would be a record year. One fifth said it will exceed US$140bn this year. That would be a game changer. Nearly all respondents agreed that the court ruling means more supply and more opportunities for managers, larger, smaller, and new entrants as well as for investors.  Over US$55bn in new CLOs have printed so far this year compared to roughly US$40bn at this time last year. The outlook was somewhat mixed although leaning toward refinancing for CLOs picking up from a lower baseline and resets/re-issues keeping up the pace, which has been fast and furious.  Depending on the manager and vehicle structure, risk retention capital is expected to be used as intended without a wave of forced unwinds. Selling of holdings is generally expected to happen over time in an orderly fashion and not be signficant enough overall to put major pressure on spreads.

Contact: Ioana Barza
ioana.barza@thomsonreuters.com