Did you know? Interesting Observations in the US CLO Market (1st Series)
With the recent reset pricing, OHA Loan Funding 2013-1, managed by Oak Hill Advisors, now boasts the longest reinvestment period in the CLO market at nearly 16 years!
With the recent reset pricing, OHA Loan Funding 2013-1, managed by Oak Hill Advisors, now boasts the longest reinvestment period in the CLO market at nearly 16 years!
As shown in the graph in this freemium article, with the 4-week moving average loan spread now firmly staying below the 400 bps mark, the current top-tier US BSL CLO AAA print increasingly appears cheap relative to historical prints. If you’re an investor in the CLO market, we would like to invite you to register with us using your business email address to gain free access to our freemium content.
The US CLO arbitrage (arb) has remained largely rangebound since July 2023. However, recently, there has been a noticeable downward trend in the arbitrage metric for new-issue US CLOs.
Recently, Golub Capital CLO 71 (M) was priced at 195/260/325/510 for its AAA/AA/A/BBB tranches, respectively. Given the size of the deal, achieving these pricing levels was impressive.
Recent primary US CLO and reset prints at the AAA–BBB levels suggest that these levels are largely consistent with historical averages.
Recent primary CLO and reset prints at the BB level suggest that demand for BB is very strong. Anecdotally, it appears that numerous investors in the market have a preference for the risk-return ratio of the BB tranche. The carry is solid, and the BB tranche has demonstrated resilience across various credit cycles.
