The market for collateralized loan obligations hit an all-time high in 2014 but the onset of a number of regulatory requirements, including the Volcker Rule, mean the good times may not last long.
CIT is preparing a $750 million securitization of small-ticket equipment leases, according to Standard & Poors.
Specialty lender Oxford Finance is preparing a collateralized loan obligation backed exclusively by loans to life science and healthcare companies, according to Kroll Bond Rating Agency.
John Lapham, co-head of leveraged finance at PineBridge Investments, thinks that the ranks of CLO managers could start to thin well before risk retention rules take effect in 2016.
The middle market that the firm plays in is less liquid and less transparent than the broadly syndicated loan market, so picking up primary loans is key for a collateralized loan obligation. And what better way to do that than to have your own origination platform?
The limited number of buyers able to write big tickets allows them players to dictate terms.
Risk-retention rules could thin the ranks of CLO managers; the industry was hoping for a workaround, but what it got is pretty much unworkable.
The U.S. market for collateralized loan obligations would shrink by 75% if proposed risk-retention rules are implemented, according to the Loan Syndication and Trading Association.
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A shift in the leveraged loan market has intensified grumbling among CLO managers about the way Standard & Poors rates the senior tranches of these deals.
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