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June 2022 | Issue 246
Past returns
Silvermine CLOs splash the cash
In Creditflux 10 years ago, we reported that three Silvermine Capital CLOs, which had built up $646.5 million of cash, had started buying loans again. In one example, 2007’s Green Creek Funding held $271 million in cash, with just $188 million in loans.
The Silvermine CLOs had been blocked from buying because of a provision which stated that if mezzanine notes had a Moody’s rating more than one notch below the original rating then all reinvestment must cease.
They then suffered downgrades in the aftermath of the global financial crisis.
Silvermine was proactive in ensuring its CLOs could earn an upgrade, paying down senior debt and inflating the equity tranche of Green Creek by $17.5 million.
Points up front
Who is going into the Creditflux interview room?
The Creditflux CLO Symposium brought together 620 market participants from across the globe, and they had one question on their lips: what’s going on in the Creditflux interview room?
After facing tough questions from our own Tanvi Gupta on a panel, Credit Suisse’s global CLO head Brad Larson suggested we were attempting to poach CLO market participants at a time when staff levels are already low (see cover story). In reply, moderator Gupta proceeded to offer Creditflux roles to her fellow panellists in front of the live audience. Larson then joked that he had positioned his analyst with a view of the room to ensure none of his staff entered.
Finally, Himani Trivedi, Nuveen’s head of structured credit, claimed ownership of the room. She said Nuveen is looking to hire European credit specialists. “You don’t have to worry about it, Brad,” she added, to laughter from the audience.
Gupta (left) grills a selection of candidates for a junior reporter role at Creditflux
Making a meal of the arb
Credit market participants are always looking at the best arbitrage opportunity and right now that seems to be at McDonald’s. Last month, fixed income specialists were commenting on a social media post highlighting how a four-piece McNuggets meal was being offered at $1, while the six-piece was trading at $2.99.
Going long the four-piece sounds like a good trade — just so long as it’s delivered sooner than European loans.
“When the US market gets legislation it does not like, people sue. In Europe we write polite commentary”
Milbank’s John Goldfinch sums up the difference between US and European CLO officials, noting how the US managed to overturn risk retention.
Global credit funds & CLO's
June 2022 | Issue 246
Published in London & New York.
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