CLO first quarter volume largest post-crisis; AAA spreads firm; high-grade secondary active

By Cristal Cody

Tupelo, Miss., April 5 – U.S. CLO new issue and secondary markets remain strong year to date following heavy deal volume seen in the first quarter.

First quarter CLO volume of $32.6 billion is the “largest for a first quarter and the fourth largest quarter of issuance in post-crisis history,” Wells Fargo Securities, LLC analysts said in a note on Thursday.

Busy CLO pricing action is expected headed into late spring.

Several deals are being offered from CLO managers including GSO/Blackstone Debt Funds Management LLC, Ivy Hill Asset Management LP and Barings LLC.

The securitized secondary market also has been active. March BWIC volume was the highest since August 2016, according to the Wells Fargo Securities note.

U.S. CLO AAA spreads have tightened by more than 20 basis points year to date, “but moved slightly wider in late March,” the analysts said.

BBB and BB spreads finished the quarter better with BBBs tighter by 5 bps and BB rated spreads tighter by 25 bps to 30 bps, according to the note.

On Wednesday, secondary trading was heavy in investment-grade CBO/CDO/CLO issues, according to Trace data. The session had $348.9 million of high-grade securities trade, along with $53.28 million of lower-rated securities.

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