CLO issuance remains thin; AAAs mostly unchanged, B-rated tranches widen

By Cristal Cody

Tupelo, Miss., Nov. 23 – CLO primary action remains light as November winds down.

“CLO supply for the month of November hasn’t been this slow since November of 2010, which had a total of only $3.9 [billion] for U.S. issuance,” J.P. Morgan Securities LLC analysts said in a market note.

Year to date, nearly $99 billion of CLOs have priced in the U.S. market, according to data compiled by Prospect News.

In the secondary market, U.S. CLO BWIC volumes have risen 42% year over year to $33.6 billion, according to the JPMorgan note.

“The majority of this increase was driven by a $6.2 [billion] year-over-year increase in AAA,” the analysts said. “Finally, banks seemed to become the dominant buyer again in primary CLO AAAs, with real money ceding ground.”

New issue AAA-rated notes were quoted unchanged in the Libor plus 148 basis points to Libor plus 170 bps area in the secondary market.

New BBB notes firmed 3 bps over the past week, while B-rated tranches traded 13 bps wider, according to the JPMorgan note.

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