Besides the Annual LSTA Conference, the other recent industry gathering of note was the Creditflux CLO Conference in NY. The focus here was trends in structured finance, from both issuer and investor perspectives.

Collateral loan obligations, as we’ve covered in a special series [link], represent the majority of loan buyers in the broadly syndicated market. Assuming almost $950 billion in the leverage loan universe, roughly half is in the hands of CLO vehicles. That’s close to $500 billion of loan demand.

As our Chart of the Week shows, other funds, including separate managed accounts, are a fast growing category of institutional investors for leveraged loans. Sources estimate that SMAs are now around $140 billion of demand for floating-rate assets.

The advent of risk retention rules almost one year ago meant that CLO managers must own 5% of the vehicle capital in the form of equity. This “skin in the game” would incent managers to be as careful with their investors’ money as they would be with their own. At least, that was one of the assumptions behind the regulators’ thinking.