CLO volume thins ahead of Fed rate decision; Europe refinancing activity forecast to rise

By Cristal Cody

Tupelo, Miss., Sept. 16 – CLO market activity was mostly quiet on Wednesday ahead of the closely watched Federal Reserve interest rate decision and the kick-off of a two-day industry conference.

Issuance in the U.S. primary market is expected to stay light for the rest of September, while the European deal pipeline is forecast to resume after slowing over the summer, sources report.

“We expect 2015 European BSL CLO issuance to set a post-crisis record, exceeding €15 billion,” Moody’s Investors Service said in a September CLO market report.

European refinancing activity also is forecast over the rest of the year.

Moody’s said that in the first half of the year, CLO refinancings and combination note issuances picked up in the U.S. market, “whereas in Europe we expect some refinancings/repricings in the second half of the year.”

Cairn Capital Ltd. plans to issue new notes in its vintage 2013 transaction, Cairn CLO III BV, and appoint a new CLO manager, according to a previously reported notice earlier in the month.

The transaction “would be the first example of an ‘amend-to-extend’ of a European CLO 2.0 transaction, effectively refinancing the deal,” according to a BofA Merrill Lynch report. “This follows the first call of a European CLO 2.0 deal in June 2015, and the first re-pricing of a European CLO 2.0 deal in July 2015.”

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