CHICAGO--(BUSINESS WIRE)--Link to Fitch Ratings' Report: Global CLO Market Trends
With 2014 off to a strong start for new U.S. CLO issuance, a notable constant with these new deals has been still-strong credit enhancement, according to Fitch Ratings in its latest quarterly newsletter.
Fitch reports 40 U.S. CLOs totaling $20.6 came to market in first quarter-2014 (1Q'14). Credit enhancement for senior notes in these CLOs has remained stable at 37.7%, compared to 37.9% in 4Q'13. In fact, 'protection on U.S. senior CLO notes appears to have stabilized within a relatively tight band since the second quarter of last year,' said Derek Miller. This follows a period of steady increases in credit enhancement for CLO credit enhancement following an average low of 34.9% in 1Q'12.
Elsewhere, further clarification of the Volcker Rule led to CLOs coming to market last quarter with provisions for springing bond buckets, a trend Miller says is likely to continue for the foreseeable future.
Fitch's latest 'CLO Market Quarterly' newsletter is available at 'www.fitchratings.com' or by clicking on the above link.
Additional information is available at 'www.fitchratings.com'.