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January 2023 | Issue 251
Analysis
CLOs
We made the most of a tricky situation
Charlie Dinning
Data journalist
Tanvi Gupta
Head of data journalism
The contrast between 2021 and the following 12 months could not have been starker. But although some heavy hitters remained on the sidelines, 94 US CLO managers priced new deals in 2022
Unlike 2021, pricing CLOs in 2022 has been an arduous task, with managers and arrangers giving concessions to get deals over the line. Sources say that, at times, both parties have cut their fees to improve deal economics, and some banks have taken down large proportions of triple A tranches while acting as co-placement agents.
It is impressive that 94 US CLO managers priced a new issue in 2022, although this is down on 2021’s 113. In Europe, 42 managers issued new deals in 2022, as Creditflux goes to press. In 2021, that figure was 49.
According to sources, the biggest obstacle to pricing has been a lack of in-house equity (either through an affiliate firm or a captive equity fund). Those that rely on third-party equity had a hard time.
US CLO term curves 2022
HPS Investment Partners is the largest manager in both the US and Europe to have not priced a new issue in 2022. It has $8.5 billion and €4.3 billion in assets under management in the respective markets, as of the third quarter 2022. HPS has three warehouses open in Europe, totalling around €700 million, sources say.
Angelo Gordon ($6.5 billion in CLO assets) is the second largest US CLO manager that was inactive in the new issue market in 2022. It marketed a new issue CLO via Goldman Sachs in October, but this was pulled, according to people familiar with the deal.
Resets and refinancings
Although they have not issued new CLOs, HPS and Angelo Gordon have updated older deals: HPS reset a US and a European CLO in 2022 (both in February). Angelo Gordon refinanced a 2020 CLO in May.
Vibrant Capital Partners is the third largest manager in the US that did not bring a new issue to market, but the largest to not enter the primary CLO market in any form. Vibrant has $6.2 billion in assets.
European CLO term curves 2022
GoldenTree was the largest European CLO manager to not price any form of European CLO in 2022.
The European CLO manager base is primed for growth, with Creditflux reporting 13 firms are looking to enter the market. But the US is seeing consolidation. The latest example is Investcorp’s purchase of Marble Point in December, and sources say three other platforms are up for sale. Firms with two or three CLOs, which rely on third-party equity and have not priced in 2022 are prime candidates for bids, sources say.
*as of 31-Dec **as of Q3 2022 *** marketing as Creditflux goes to press
42
The number of European CLO managers issuing new deals has fallen by seven from 2021’s 49
94
The number of US CLO managers issuing new deals has fallen by 19 from 2021’s 113
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Global credit funds & CLO's
January 2023 | Issue 251
Published in London & New York.
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