CLO volume light; Cairn refinances; U.S., European secondary trading thin, spreads stable

By Cristal Cody

Tupelo, Miss., Oct. 19 – October CLO primary action remains light, but more activity is ahead before the year is out, according to market sources on Monday.

“Primary CLO market continues at a subdued pace, with only $2.6 [billion] MTD on 5 deals,” J.P. Morgan Securities LLC analysts said in a note. “October is on pace as the slowest month in the new issue US CLO market in 2015. A challenging arb and the inability for CLO spreads to stabilize is a major factor impacting CLO formation.”

Year-to-date U.S. issuance has climbed to more than $90 billion, including middle-market, broadly syndicated and refinancing transactions, according to Prospect News data.

BofA Merrill Lynch analysts said in a note on Monday that U.S. broadly syndicated CLO supply could pick up to hit $100 billion on the stabilization of oil prices and an elevated forward institutional loan calendar, “which historically is highly correlated with the pace of weekly CLO issuance.”

In new issuance, details emerged on Cairn Capital Ltd.’s €306.05 million private placement restructuring of a vintage CLO deal.

Secondary market activity was light over the previous week in the U.S. and European CLO markets, according to BofA Merrill Lynch.

The European CLO secondary market saw low trading volumes with about €140 million of bonds on BWIC lists, though many bonds did not trade, according to the note.

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