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Secondary market prices improve; CLOs less likely to see Fed benefit; Voya closes euro CLO
By Cristal Cody
Tupelo, Miss., March 31 – CLO secondary market prices are improving as trading volume thins this week.
On Monday, $659.65 million of investment-grade CBO/CDO/CLO securities and $225.72 million of lower-rated paper were traded in the secondary market, according to Trace data.
In the same session a week ago, $3.19 billion of high-grade issues and $50.73 million of CBO/CDO/CLO securities were traded.
During Monday’s session, the high-grade paper traded at an average price of 89.20, compared to 80.70 in the same period a week ago.
The non-high-grade issues traded on Monday at an average 60.20 price, improved from 50.80 in the same session last week.
While other markets have seen heavy issuance following new programs from the Federal Reserve, the CLO market is remaining quiet.
“U.S. collateralized loan obligations are less likely to benefit from the current Fed programs because they are backed by leveraged loans issued by non-investment-grade companies,” Moody’s Investors Service Corp. said in a report on Monday.
Other asset classes including asset-backed securities, commercial mortgage-backed securities and residential mortgage-backed securities are expected to benefit from the Fed’s programs, according to the report.
“The Fed’s direct and indirect support of structured finance markets, banks and other financing sources will support financial institutions’ ability to lend and other credit availability, reducing the likelihood of defaults on securitized debt,” Moody’s said.
In other activity, Voya Alternative Asset Management LLC closed Tuesday on its previously reported €354.75 million Voya Euro CLO III DAC deal. The CLO priced the class A floating-rate notes at Euribor plus 92 basis points.
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