Our greatest weakness lies in giving up. The most certain way to succeed is always to try just one more time. – Thomas A. Edison
The recent pricing of Neuberger Berman Loan Advisers CLO 59 appears to mark a significant milestone in the 2.0 CLO market. The AAA tranche was priced at 129 bps, while the BB tranche came in at 480 bps. Among non-short-dated deals priced since 2012, the DM differential between AAA and BB in this deal has narrowed to a new low of 351 bps.
This indicates that demand for BB tranches is surpassing supply, driving BB spreads tighter relative to AAA. The current environment of higher interest rates has certainly contributed, with investors drawn to the attractive all-in yields.
Please email info@clopremium.co.uk if you come across a tighter AAA-BB differential pricing than 351 bps in the 2.0 US BSL CLO market.
Related article:
US BSL CLOs: Weekly Arbitrage Metrics and AAA Spreads
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