Rise in euro CLO refinancings forecast; securitized secondary market volume rises

By Cristal Cody

Eureka Springs, Ark., Jan. 26 – Additional refinancing action is expected in the European CLO market following a strong refinancing pace in vintage U.S. CLOs.

S&P Global Ratings said in a news release on Thursday that it anticipates a rise in refinancings of euro-denominated CLOs.

“We expect to see an increased number of CLO 2.0 transactions refinance in 2017, given current market pricing on CLO liabilities,” S&P said.

Two European CLOs have been refinanced in January, while more than $5 billion of U.S. CLOs have been refinanced over the month, according to market sources.

“The first few months of 2017 will be noteworthy as the market attempts to ascertain what new CLOs will look like with risk retention rules now in play,” Fitch Ratings said in a news release on Wednesday. “New CLOs began including additional qualifiers in offering documents regarding risk retention compliance along with greater disclosure of the asset manager's method of compliance.”

In other activity, the securitized secondary market has remained active with volume up over the week.

On Wednesday, $367.9 million of high-grade CBO/CDO/CLO issues and $312.3 million of non-investment-grade securities were traded, according to Trace.

During Tuesday’s session, $233.24 million of investment-grade issues and $239.33 million of lower-rated CBO/CDO/CLO issues traded, up from $186.6 million of high-grade and $92.1 million of non-investment-grade securities traded on Monday.

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