This year’s Global ABS conference in Barcelona had a particularly bullish tone, according to industry veterans who have been attending the Spanish conference for the past 15-20 years.

Attendees at the conference hosted by AFME and Invisso last week heard the European CLO market will have a ‘dilly dilly’ rest of the year.

No idea what dilly dilly is? Neither did we. But we were enlightened as conference-goers directed us to an old Budweiser commercial where the chant was popularised.

There was also reference to a ‘Goodie index’, which looks at the quantity and the quality of the conference merchandise service providers have at the conference, which have been the highest seen for a long time, one panellist said.

These are sure signs that the CLO market is in good health.

While panellists disagreed on whether inflation was behind us or not, one thing that was agreed on was the strong technicals in the CLO and loan market. Investors also expressed optimism over credit quality with one panellist believing we were “likely past the peak for defaults”.

Of course, the market still found time to bemoan arbitrage becoming too stretched and asset sourcing becoming an issue with loans trading too tight.

And while the outlook for credit quality remained generally positive, investors were warned that CLO manager selection has become even more crucial with creeping tail risk in portfolios and idiosyncratic issues.

See below for our nine observations from the conference.