CLO primary slowly reopens; dollar, euro CLO forecasts drop; senior tranches firm

By Cristal Cody

Tupelo, Miss., May 4 – The primary markets in the United States and Europe are slowly opening with new CLOs priced in late April and a handful being marketed in May.

At least one static dollar-denominated CLO and a euro-denominated CLO priced last week, sources report.

As previously reported, Redding Ridge Asset Management (UK) LLP priced €288.2 million of notes in the Zinnia Finance DAC broadly syndicated CLO offering.

Year to date, dollar-denominated primary market is down 53% year over year with issuance limited due to market volatility from the coronavirus impact, according to a Wells Fargo Securities, LLC report on Monday.

Wells Fargo analysts now expect total U.S. CLO issuance of $50 billion and €15 billion of euro-denominated supply for 2020.

Year to date, $20.8 billion of notes have priced in 43 broadly syndicated CLOs, while about $25.5 billion of vintage CLOs have been refinanced, reset or reissued.

As the year opened, market participants expected about $90 billion to $100 billion of dollar-denominated CLO issuance and €26 billion of euro deal volume for 2020.

Meanwhile, CLO AAA, AA and BBB spreads tightened 10 basis points on the week, while single-A tranches firmed 20 bps week over week, BofA Securities said in a report on Monday.

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