CLO new issue market quiet; vintage deal refinancing takes focus at start of year

By Cristal Cody

Tupelo, Miss., Jan. 16 – CLO new issue activity remains quiet so far in 2018, but the refinancing space is heating up with steady activity expected over the month, according to market sources on Tuesday.

Several U.S. deals already have priced in the first two weeks of the year, while refinancing activity in the European market also is expected during the month.

Highland CLO Management, LLC is marketing a $375 million refinancing of a CLO that was originally brought to market in 2014 by Acis Capital Management, LP.

BMO Asset Management Corp. priced $362,562,470 of notes in the year’s first refinancing and reset deal in the first week of January.

In 2017, a record $164 billion of vintage CLOs were refinanced, according to market sources and Prospect News data.

In other activity, CLO demand is expected to return to the loan market once the primary market gears back up, according to a BofA Merrill Lynch research note on Tuesday.

Market analysts expect more than $100 billion of new CLO issuance in 2018.

“CLOs are an important factor to consider in the loan market given they are the single biggest buyer of loans and represent 60% of the primary demand within this asset class,” BofA Merrill Lynch analysts said in the note.

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