CLO activity up more than 300 per cent since 2011, according to Appleby report

Collateralised loan obligation (CLO) deals increased by 151 per cent in the first half of 2013 when compared with the first six months of 2012, according to Appleby. This continues a three-year trend in the rapid increase of CLO issuances, with the number of deals growing by more than 300 per cent between 2011 and 2012.

The law firm’s CLO Insider report provides data, insight and analysis on the global CLO market, focusing on the first half of 2013.

A total of 98 CLOs closed in the first half of 2013, a big jump from the 39 deals closed in the same six months in 2012.

In the first six months of the year, the top 10 deals by value increased by an average deal size of $40m over the second half of 2012, and $175m over the same period in 2012. The report also found that with $47bn of issuance, the first half of 2013 was the biggest half-year ever in terms of value for CLOs and CDOs. The average deal size for CLOs closed during this time was $482m.

A core set of arrangers are dominating the CLO market, with Citigroup leading the ranking for the first two quarters of 2013 with 20 deals, worth $9.5bn, according to the report. It was followed by Bank of America Merrill Lynch ($6.5bn), Morgan Stanley ($6.1bn), Wells Fargo ($4.0bn) and RBS ($3.6bn).

A range of investors was involved at each of the different tranches of capital structure, including Japanese banks and US pension funds, which are typically investing at the AAA level, where yields were around LIBOR plus 140bps at the end of 2012.

According to the Appleby report, spreads on AAAs have since narrowed, dropping to near 115 in the second quarter of 2013. 

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