CLO market off to ‘quiet start’ in 2015; January pipeline shows signs of activity

By Cristal Cody

Tupelo, Miss., Jan. 7 – Activity in the CLO market remains quiet, though the pipeline is starting to fill, according to market sources on Wednesday.

“It’s been a very quiet start,” one source said. “Some stuff is starting to get going.”

PineBridge Investments LLC is marketing the Galaxy XIX CLO Ltd./Galaxy XIX CLO LLC transaction via Citigroup Global Markets Inc.

Apollo Credit Management (CLO) LLC also is in the deal pipeline.

CLO issuance in the U.S. and European markets reached a record $161 billion in 2014, according to data compiled by Prospect News.

Market analysts forecast issuance to decline to the $100 billion area as managers become more mindful of risk retention regulations.

Federal agencies published the final rule to implement the CLO credit risk provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act in the Federal Register on Dec. 24.

Compliance with the regulations to require CLO managers to retain a 5% slice of the deal is required by Dec. 24, 2016.

According to the Loan Syndications and Trading Association, any CLOs issued after Dec. 23, 2016 will be subject to the final rule.

The Federal Reserve published an order on Dec. 18 that extends the conformance period for banks to comply with CLO ownership restrictions to July 21, 2016 and provides an additional one-year extension to July 21, 2017.

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