What a difference a year makes

Matthew Layton

Partner, Pearl Diver Capital

Despite the headlines about lender-on-lender violence, the driver of CLO manager performance is how managers deal with the other 350 names across their CLO platform. No single name events can undo that.

We’ve all had a taste of private credit

Roxana Mirica

Partner and head of capital markets, Apax Partners

Across the upper mid market, if you asked a sponsor five years ago, ‘How much are you using private credit?’ it was a number close to zero. Today, it can be as high as 100%, including multi billion-dollar deals.

It’s not a risk or liquidity premium. It’s an information premium

Alan George

Head of structured products, Golub Capital

The persistent premium between private credit CLOs and BSL CLOs is bringing a lot of new investors into the space.

It’s not cannibalisation, it’s coexistence

Blake Jones

Partner, Clifford Chance

There are lots of options for credit managers in the CLO and private credit spaces. In particular, Clifford Chance sees strong demand for private credit structures that make it easier for insurers to invest in feeders, and match adjusted notes.

I think it’s constructive that we have this financing alternative

David Altenhofen

Head of investments, Accunia

During times when public markets more or less close down, as in some recent years, private credit can fill the gap for borrowers.

If you’re looking at private equity as an asset allocation, then CLO equity is complementary

Camille McLeod-Salmon

Portfolio manager, Fidelity Investments

It isn’t just about the arb for CLO equity, it’s how it can fit into an alternatives strategy, and benefits like the lack of a J-curve and low correlation to other high-yielding assets.

I do not see that we will keep tightening to 120 or 125

Serhan Secmen

Global head of CLO business, Napier Park

Once CLO triple-A spreads reach 135-140, there are so many deals that will want to come and refi and reset, it will provide pressure to keep spreads there.

Technology firms should look at loan settlement and trustee report data

Justin Pauley

Head of CLO capital markets, Brigade Capital

Electronic trading of CLO secondaries is coming, and it will improve the market, but other areas also need help.

I predicted a common approach, but we’re seeing different language

Kos Vavelidis

Partner, DLA Piper

Most deals have some language to deal with snooze-drag, but DLA Piper is still seeing a lot of variety in the stips.

The question is going to be, what do borrowers value more?

Adeel Shafiqullah

Head of European CLO management, Sculptor Capital

The BSL market is cheaper. But if the borrower values flexibility, then private credit will be more competitive.

You’re going to continue to see the same sort of growth

Sid Chhabra

Head of securitised credit, RBC Bluebay Asset Management

Chhabra believes issuance should remain strong this year due to the capital available from investors, the lack of defaults and stability in rates.

The arb on day one is never an accurate predictor of what you’ll make in six or seven years

Gauthier Reymondier

Partner, Bain Capital Credit

Tightening liability spreads by a few bps is good for those equity investors who focus on the first two years of cashflows, but don’t move the needle as much for long term investors like Bain.

Any notion you had that public companies won’t do something nasty has been thrown out the window

Adrian Marshall

Chief executive officer, Elmwood Asset Management

Stressed telecoms companies have been looking at liability management transactions and shifting to pretty aggressive tactics.

We’re in a good place

Dushy Puvan

Head of EMEA CLOs, BNP Paribas

European CLO issuance is strong and it’s a good time to invest in CLOs — and technicals are helping drive that demand.

The lack of middle market loan issuance can be a brake on CLO formation

Shiloh Bates

Chief investment officer, Flat Rock Global

Although middle market CLOs are having a good year, new issuance has slowed from the highs of the fourth quarter of 2023.

We won’t see 2021 issuance again based on today’s LBO pipeline

Matthew McCabe

Managing director, Oaktree Capital

After the best quarter for European loan issuance in three years, the lack of LBOs may soon impact CLO issuance.

You want to give a manager flexibility

Alexander Collins

Partner, Cadwalader

With subjects like up-tier priming it’s important not to hamstring a manager with conditions that might lead to worse outcomes for the deal.

Any investor who isn’t allocating to CLOs is losing money

Ali El Ghorfi

Head of Capital Markets, Alternative Credit, AXA IM

CLOs are one of the few products to offer scalability and exposure to floating rate assets, and on the whole CLO managers have done a very good job in terms of managing their portfolios over the past two years.

We’re still seeing the triple A market being dominated by European banks

Florent Chagnard

EMEA CLO Primary Head, Citi

Chagnard explains the drivers for the extremely positive European CLO market, with strong senior demand from European banks as well as Japanese investors.

It’s not quite settled yet

Aaron Scott

Partner, Dechert

Dechert sees a lot of variation in snooze-drag language, but as investors continue to focus on the topic the market should start to see more convergence.