Q4 Euro CLO outlook — Sticky triple-As, loan allocation scrap and reset revivals

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Q4 Euro CLO outlook — Sticky triple-As, loan allocation scrap and reset revivals

Sam Robinson's avatar
  1. Sam Robinson
10 min read

The European CLO machine is slowly churning with market participants telling 9fin that 15-20 managers are in the primary pipeline. But with the pricing window likely to close at the end of October/beginning of November, according to one manager, there could be a rush to get deals done.

This could mean CLO new issuance volumes (€18.6bn YTD), are on track to be a lot closer to 2022’s volumes of €26.2bn than might have been expected.

But managers could face a slow-down with the iTraxx Crossover index jumping to 458bps this week (having been as tight as 375bps at the end of July, albeit before the 20 September roll to series 40) leading to a slight softness in the wider credit market. It also points to loan allocations getting trickier with huge demand for loan paper and triple-A spreads unlikely to tighten drastically.

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