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Global credit funds & CLO's
August 2022 | Issue 248
Published in London & New York.
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August 2022 | Issue 248
Past returns
Absolutely floorless CLOs
Five years ago in Creditflux we reported on the emergence of European CLO tranches without Euribor floors. These bonds, rated double A and single A, priced with coupons set 20-30 basis points wide of pari passu bonds to compensate for the lack of a floor at 0% when Euribor was roughly negative 30bp.
In the years since, three-month Euribor has been mired at negative 30-50bp. However, on 14 July, it moved into positive territory for the first time in seven years, benefiting holders of unfloored CLO tranches, who will receive higher coupons.
Points up front
Andromeda aims to stand tall against credit beasts
There are no end of monsters lurking in the credit markets this year, so it is perhaps fitting that Alberto Gallo has dubbed his new credit fund management business Andromeda.
In Greek mythology, Andromeda was left to face the sea serpent Cetus, and it seems the fund manager is hoping to channel the courageous element of this tale. It has used the Fearless Girl sculpture from downtown Manhattan as the basis for its logo.
Gallo’s Andromeda claims on its website that it “combines macro analysis with deep dives into countries, economic sectors and corporate fundamentals”. But given the headwinds facing credit funds this year, it may be facing a challenge of a similar magnitude to its namesake: the heroine Andromeda was chained to a rock as she faced off with Cetus.
Titian’s Perseus and Andromeda: Cetus has fangs, but economic crises are many-headed monsters — and they are not usually defeated by flying Greek heroes
ESG official rants at ESG
Stuart Kirk, the former head of responsible investing at HSBC Asset Management, signed off on a frank note as he unveiled his resignation on LinkedIn.
“Let me tell you,” he wrote, “most of what’s out there [on ESG] is bonkers...”
The post also made the bold claim that Kirk is unveiling a new asset class for “arguably the greatest sustainable investment idea ever conceived”. And he framed this by saying he is not one for over-exaggerating.
“We’ve been treated very well by our warehouse providers. But maybe that’s because we’re CSAM”
At the Structured Finance Association’s CLO conference in Las Vegas, CSAM’s Meric Topbas says being one of the largest CLO issuers has its perks when warehouses come under pressure.