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January 2021 | Issue 230
Top stories on creditflux.com: from tight spreads to an unprecedented crash and recovery
january
Deutsche Bank’s Global CLO head moves to buy side
Francis McCullough joins Sound Point Capital Management in New York as global head of CLO capital markets and structuring in the first of a number of big moves on CLO primary desks in 2020. Hsiang Lim takes over as Deutsche’s global CLO head.
october
Wells Fargo parts ways with star CLO research team
Managing director David Preston — one of the biggest names in the CLO industry — leaves Wells Fargo. “We have decided to transition from a fixed income research publishing platform to a desk analyst and strategy model,” a spokesperson says.
Preston: his work, including the CLO style guide, was acclaimed, with Wells Fargo voted best at CLO research for four years running as part of Creditflux’s CLO Census.
january
Fed gives green light to CLO bond buckets
The year starts with good news as the US Fed paves the way for 5% bond buckets to return to CLOs in October.
February
Private credit specialist hires Wells Fargo for first CLO
Seven US CLO managers debuted in 2019 and New Mountain aims to become the first of 2020. It hires Ivo Turkedjiev from Invesco as portfolio manager and makes the breakthrough in October.
March
Citi looks to unwind $632 million loan TRS
Citi seeks to liquidate a total return swap as panic sweeps across financial markets amid global lockdowns. When another bank also looks to unwind a loan TRS, the secondary market is flooded with $1.2 billion of loans in a day.
April
Two US CLOs fail senior OC tests
The March collapse starts to filter through to CLOs as Apex and Marathon become the first CLO managers in the 2.0 era to have deals fail senior over-collateralisation tests.
april
Fed backs new issue CLO triple As in amended talf
The Federal Reserve’s term asset-backed securities loan facility is expanded to support CLO triple As, but given the criteria many believe a talf-CLO is unlikely. Golub defies this by printing such a CLO in October.
April
CLO warehouses trigger draw stops
CLO warehouses are put on ice as loan prices plunge.
may
‘Nochu covenant’ leaves big CLO managers in a trading bind
Managers of CLOs with a Nochu covenant face restrictions: they must adhere to a matrix that gradually restricts their ability to invest in cov-lite loans as their CLO warf rises.
may
Onex hires Jaber as it launches CLO investment business
Onex is expanding amid the chaos in credit markets as former Carlyle co-head of structured credit Ronnie Jaber joins to buy CLOs.
may
PGIM defers European CLO equity payments
PGIM is the first manager to put off equity distributions and reinvest capital as it seeks to take advantage of historically low loan prices. Apollo and Barings take similar steps.
may
US retailer bankruptcy hits CLOs and CDX HY tranches
US retailer Neiman Marcus’s filing for chapter 11 protection opens the prospect of a fourth credit event in the CDX HY index and a sixth for on-the-run HY tranches, as well as a hit for 18 CLO managers. Several more defaults mean CDX HY equity is wiped out three months later.
june
Pine Brook sells CLO firm WhiteStar
CLO M&A picks up as Pine Brook sells its majority equity stake in CLO specialist WhiteStar Asset Management to Clearlake Capital Group. Prior to this, Morgan Stanley IM takes on Assurant’s CLO unit.
May
Jefferies raids Citi’s European CLO desk
Jefferies makes a statement of intent by hiring three from Citi’s primary European CLO team, including its head, Laura Coady. After agreeing terms with Coady, Jefferies brings in Citi’s Luis Leon Carsi and Hugh Upcott Gill.
june
Three managers linked to CLOs borrow on PPP
Canaras, Highland and Par-Four borrow up to $1.7 million between them on the Paycheck Protection Programme (PPP) — the US fiscal relief package to help small businesses impacted by the coronavirus pandemic.
july
MeDirect CLO team seeks spin-off from bank
The credit team at MeDirect is looking for a strategic partner to spin off from the bank. Talks over the business are ongoing.
june
Diversity test failure: dealing with racism
As part of our series on Black Lives Matter, we speak to MJX’s Kentay Miller, CFIP’s Levoyd Robinson and others on their experiences in the CLO industry.
july
Janus Henderson launches ‘first of its kind’ senior CLO ETF
This soon becomes two of a kind as Alternative Access also puts forward CLO ETF plans.
august
Details emerge on nature of Revlon payment ‘error’
Citi files a lawsuit against 12 loan fund managers over a payment made by Revlon to lenders, which Citi claims was executed by mistake. Citi falls out with Brigade over the issue and steps down from a CLO mandate.
August
US CLO manager composes breakthrough CLO equity fund
Symphony launches fund that will invest in the majority equity of its CLOs.
august
CLO managers turn out pre-covid warehouses by splitting them in half
Dividing a warehouse and transferring half the assets into a second warehouse, then buying assets in the open market between pricing and closing “is a credible way to empty a warehouse that was underwater into two performing CLOs”, says Lawrence Berkovich, partner at Allen & Overy in New York.
august
First Eagle has landed: Morgan Stanley prints five-year CLO
Normality returns as First Eagle produces the first five-year CLO since March.
august
Ex-Morgan Stanley CLO head joins tech firm
Bob Hershy resurfaces at Figure, a San Francisco-based firm bringing blockchain technology to financial markets.
october
Former Ares partners put ESG and tech at centre of new CLO business
Pacific & Plains Capital is led by founders Americo Cascella, Daniel Hall and Shane Mengel. It is based in Dallas and aims to launch a first US CLO early in 2021.
november
Sycamore Tree hires CLO investor in Dallas
Yet another new firm led by experienced CLO officials, Sycamore is led by former Highland trio Mark Okada, Trey Parker and Jack Yang. CLO investor Scott Farrell is one of the firm’s first hires.
october
Former GoldenTree high-flyers launch structured credit firm in Los Angeles
Former GoldenTree partner Cee Sarabi and business development specialist Rachael Stimac Sarabi establish an asset manager that will invest in structured credit assets.
november
Tetragon draws up solution to phase out ‘TriMark loopholes’
TriMark’s super-priority US loan transaction sparks debate among the CLO community as it leaves the debt of some minority first lien lenders subordinated without their consent, while also stripping them of rights in credit agreements. Tetragon is working on industry-wide solutions, including adding concentration limits to CLO documentation.
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Global credit funds & CLO's
January 2021
| Issue 230Published in London & New York.
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