July 2021 | Issue 236
Past returns
Mid market CLOs move into light
Ten years ago in Creditflux, we reported that S&P was reducing shadow ratings after it notified CLO managers it would not assign such ratings to companies with more than $499 million of outstanding debt.
This mostly affected middle market CLOs, which need a rating on loans extended to small companies. However, the CLOs worked through the change and mid market CLO issuance continued to grow. There are now 33 issuers of mid market CLOs.
This year, rating agency attention has switched to managing workloads. We reported in March that S&P asked banks for their issuance schedule for the next six months, warning it may not be able to process any deals outside of these lists.
Points up front
CLO veteran earns OBE
We spotted a household name in the CLO business among those being feted in last month’s Queen’s birthday honours list — former Alcentra chief executive David Forbes-Nixon was awarded an OBE.
Forbes-Nixon co-founded Alcentra, one of the biggest issuers and investors in CLOs globally, in 2002. He left the firm last year and switched his attention to running the DFN Charitable Foundation and DFN Project Search.
The OBE marks a major accomplishment — perhaps ranking just a shade above the numerous Creditflux Manager Awards Forbes-Nixon picked up during his time at Alcentra. We’d like to congratulate him for his charitable efforts and wish him every success.
Forbes-Nixon: an OBE is wonderful, but that Creditflux gong is much shinier
To have and to hold
The bankruptcy of Highland Capital Management rumbles on. As the case turns messy, a judge has poetically suggested it is like a divorce between the company and its former chief executive officer James Dondero.
First, the couple lived under the same roof “for the perceived best interests of the family… Next, things developed similarly to a situation in which one spouse wants to keep the family vacation home, boat, or mutual funds, but the other spouse (the one who happens to have custody and control over them) thinks the assets need to be liquidated to pay off the family’s expenses or debt.”
We hope it’s not too hard on the kids.
“A lot of value was lost due to CLO window dressing”
A CLO equity investor reveals that some managers cleaned up their portfolios before heading to Japan for roadshows. By doing this they were crystallising losses.
Global credit funds & CLO's
July 2021 | Issue 236
Published in London & New York.
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