Europe deal volume strong year to date, set to surpass 2014 total; euro CLO quality better

By Cristal Cody

Tupelo, Miss., Aug. 11 – European CLO market activity remains strong year to date and volume is on target to exceed the total amount of issuance brought in 2014, according to market sources.

Total euro-denominated CLO volume is €15.64 billion from 28 deals year to date, according to data compiled by Prospect News.

In comparison, €6.92 billion of European CLOs priced in the same period in 2014, according to a BofA Merrill Lynch research note.

The market has been quiet so far in August, but more issuance is expected over the rest of the year, market sources report.

BofA Merrill Lynch CLO analysts expect annual volume to exceed the €14.9 billion priced in 2014 and forecast €18 billion of total European CLO issuance in 2015.

Moody’s Investors Service said in a report released on Tuesday that the performance of the European CLO market was strong in the second quarter.

“CLO collateral credit quality, as measured by the weighted average rating factor improved among CLO 1.0s in Q2 2015 after hitting an all-time worst Q1 2015,” Hevia Portocarrero, a co-author of the report, “European CLOs - Q2 2015 European CLO Credit Trends: Most Credit Market Indicators Strong and Stable,” said in a release. “Meanwhile, CLO 2.0 WARF decreased slightly in Q2, and remained well below that of CLO 1.0s.”

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