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CDOs

News

Babson Assumes Management of Five Jefferies CLOs

The assumption of these CLOs has pushed the firm's high yield assets to close to $20 billion.

S&P Requests Feedback on CLO Metric

Standard & Poor’s would like input from loan market participants on a proposed metric that would estimate a CLO’s recovery value.

Fitch: More CDOs Breach Event of Default Overcollateralization Ratio Trigger

Several European collateralized debt obligations are expected to experience an event of default triggered by a breach of the event of default overcollateralization ratio trigger, Fitch Ratings said.

BNP Hires Three ABS Professionals in London

BNP Paribas appointed Giovanni Pini as head of ABS strategy and Olivier Morand-Duval as European head of ABS trading. Perry Inglis also joined as head of ABS valuation and origination.

Highland to Launch New CLO Value Fund

Highland Capital Management, which last week ago returned investments and closed its CLO Value Fund I, is preparing to kick off another similar fund.

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Articles

CLO Market Sees Consolidation Activity Surge

At the onset of the credit crisis, market participants expected a wave of consolidation in the CLO market. The wave turned out to be little more than a ripple, with less than 5% of the CLO market making management changes during the last year and a half, according to analysts at Citigroup Global Markets. That, however, now appears to be changing, with several managers recently acquiring portfolios, and a number of others looking for buyers, sources said.

Will Smurfit-Stone Set a Precedent for CLOs?

CLO managers don't want the exit doors closed on them. Last month, a bank consortium syndicated a $1.2 billion exit loan for Chicago-based box maker Smurfit-Stone. The deal irked several CLO managers because its structure - it was set up to be funded two months after it closed - and lack of covenants effectively kept them from participating. The deal went on to be a hit, trading up after breaking on the secondary. And now some CLO managers wonder if the Smurfit deal will set a precedent and shut CLOs out of other exit loans.

The Search for Alternatives

With new accounting rules, regulatory uncertainty, and wary investors making ABS uneconomical for issuers, pockets of the securitization market are paralyzed. Participants are forced to look at alternative funding sources, which Nora Colomer explores in this month's cover story. Solutions range from originators resorting to more club-like deals, where risk can be shared, to banks selling portfolios of whole loans to each other. However, nothing can replace securitization as the most effective way to promote mortgage growth and, at the same time, provide an efficient way for companies to shift risk.

Regulatory Reprieve

It's fitting that the ASF conference is being held in Washington, D.C. Uncle Sam, after all, has been playing a crucial role as securitization's savior as well as working double time to alleviate the problems plaguing the mortgage market. The Treasury Department has led the way, as Nora Colomer reports in this month's cover story, by increasing the capital available to Fannie Mae and Freddie Mac. Giving the GSEs more leeway to increase their mortgage holdings enables them to buyout more delinquent loans without selling MBS, thus alleviating supply pressure in the mortgage market.

Middle-Market Securitizations: Trends and Outlook for 2010

"There are snakes that go months without eating. And then they finally catch something, but they're so hungry that they suffocate while they're eating. One opportunity at a time." - Don Draper, Mad Men The year 2009 was a year of mixed signals-on one hand, revised assumptions by rating agencies such as Moody's Investors Service and Fitch Ratings led to a series of downgrades. Fitch also cited concern that rising default levels, lower recoveries and refinancing risk may indicate even more downgrades in the future. On the other hand, trading prices for CLO notes made a dramatic rebound in the first half of 2009, and the first middle-market (MM) CLO of the year priced in December (NewStar Commercial Loan Trust, 2009-I). In addition, new warehouse-type securitizations have begun to emerge, with Ares Capital Corp. and Fifth Street Finance Corp. announcing deals with Wells Fargo in 2009.

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