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Global credit funds & CLO's
November 2022 | Issue 250
Published in London & New York.
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Opinion
November 2022 | Issue 250
Past returns
Alhambra CLO paves the way
Five years ago in Creditflux, we reported that Be-Spoke Capital was launching the first SME European CLO since the financial crisis.
The static CLO, Alhambra SME Funding 2019-1, closed two years later. Sadly, performance has been an issue, with DBRS Morningstar downgrading the deal’s AAA notes to AA in September. Class C notes, originally rated BB-, are now CCC.
The rating report says that, as of 18 August, €103.3 million of loans were considered defaulted, and the class C notes are underwater.
However, at Creditflux’s CLO Symposium in May, panellists noted that arrangers were tentatively talking about launching similar deals.
Points up front
Shhh, don’t tell! Secret CLO pricing is in progress
The CLO industry has come a long way in the last decade — so much so that managers can now boast of their track records and CLOs are no longer (wrongly) touted as the acronym that caused the 2008 financial crisis. But in recent weeks some CLO market participants seem to have gone back to a time when pricing a CLO was taboo.
As credit volatility has picked up, CLO discount margins are no longer being shared frequently, and one investment bank has supposedly been concealing CLO pricings entirely, with only the deal manager and investors notified. This break from convention is supposedly because the bank fears that disclosing levels will hurt follow-up deals.
It is worrying when full disclosure is not released on CLO pricing. But Creditflux readers need not fret. We find that the offer of a league table credit soon draws secret CLOs out from the shadows.
This CLO has priced. But for heaven’s sake don’t say a word until it’s in a league table
CLO managers didn’t take advantage of volatility, say CLO managers
Creditflux’s CLO Census shows CLO managers can be hard on themselves. We asked whether managers had taken full advantage of the sell-off this year and 53% of managers conceded the answer was “No”. It’s not surprising, then, that one said the industry would be better if there were fewer CLO managers.
THEY SAID IT
“I don’t know and I don’t care about ESG”
Only some CLO managers that market themselves as ESG-compliant truly are, according to the Creditflux CLO Census 2022. However, one survey respondent demonstrated that ESG CLOs are divisive.