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From S&P Global: Theme Capital Markets Leveraged Finance & High Yield Segment Corporations Investment Banking Investment Management Private Equity Tags Leveraged Commentary and Data CLO issuance in the U.S. in 2018 has topped $125 billion, officially eclipsing the all-time record of $124.1 billion set in 2014. The recent activity raises the total size of the CLO market in the U.S. to $600 billion, according to J.P. Morgan, which projects the market to grow to $700 billion by the end of 2019, after expected net issuance of $100 million next year, taking into account maturing CLOs and loans that are paid down. To be sure, the CLO market has accelerated in recent years, and following the financial crisis. The total outstanding at the end of 2014 was $350 billion. The pre-crisis peak was $256 billion in September 2008. Collateralized loan obligation vehicles are an essential component of the U.S. leveraged loan investor base, snapping up roughly 60% of credits offered to institutio

BUSINESS NEWS SEPTEMBER 22, 2019 / 6:19 PM / 4 DAYS AGO Saikat Chatterjee 4 MIN READ LONDON (Reuters) - Lending standards in the rapidly growing loan market are deteriorating and complex financial products that mask risks to banks have parallels with the run-up to the 2008 financial crisis, the Bank for International Settlements warned on Sunday. The number of collateralized loan obligations (CLOs), a form of securitization which pools bank loans to companies, has ballooned in recent years as investors hunt for higher returns by buying into loans to lower-rated and riskier companies. Like the collateralized debt obligations (CDOs) that bundled U.S. sub-prime mortgages into complex products and were blamed for triggering the global financial crisis, CLOs also have complex structures that can mask underlying risks. The BIS said there were important differences between CLOs and CDOs that made the former less risky, but it warned that the scramble by investors for higher yields was leading

From Reuters - BONDS NEWS APRIL 22, 2019 / 10:34 PM / 5 MONTHS AGO Kristen Haunss , Loan Pricing Corporation 5 MIN READ NEW YORK, April 22 (LPC) - The US Collateralized Loan Obligation (CLO) market grew to more than US$600bn in March, the first time the asset class has topped that size, even as fund spreads remain challenged. The outstanding CLO market, the largest buyers in the US$1.2trn leveraged loan market, has been growing since the credit crisis, increasing by 119% between January 2013 and the end of March, when the size of the market rose to US$600.52bn, according to LPC Collateral data. There has been US$39.4bn of US CLOs arranged this year through April 19, inline with the US$38.7bn sold during the same period last year, according to the data from LPC, a unit of Refinitiv. A record US$128.1bn of US CLOs was arranged in 2018. US CLO issuance this year has been challenged as spreads on Triple A tranches, the largest and most senior piece of the funds, have continued to widen, hi

A gigantic spike in 3 years. The UK dominates. The volume of over-the-counter (OTC) interest rate derivatives traded globally soared by 141% in three years to $6.5 trillion   per day  in April 2019,  according to  the Bank for International Settlements' new Triennial Survey of Global Derivatives Markets. In the prior survey period, April 2016, $2.7 trillion per day in trades were executed. Since 2001, the magnitude of trading volume has multiplied by a factor of 13, from $490 billion per day to $6.5 trillion per day, with a gigantic spike over the past three years: OTC derivatives are securities that are generally traded through a dealer network rather than on a centralized exchange such as the London Stock Exchange or the New York Stock Exchange. Some derivatives can be explosive, such as the credit default swaps (CDS) that brought Lehman Brothers and AIG to their knees in the last crisis, and which still remain a threat today, especially with the U.S. government this week bowing

Snapback Bloodletting in the Overripe Bond Market. OK, so we've got ourselves one heck of a snapback in government bond yields, not just in the United States, but globally. And the negative-yield mongers that were out there for months, preaching their book and prophesying near-zero or negative yields even for the 10-year US Treasury – this includes hedge funds with algo trading strategies – they're suddenly facing steep losses on their highly leveraged bets because yields have snapped back viciously. The 10-year Treasury yield closed on Friday at 1.90% [Sep 13]. This was up 43 basis points, or close to half a percentage point from eight trading days ago, from September 4, when it was 1.47%. When bond yields rise, bond prices fall by definition. For the 10-year yield, a 43 basis-point jump in eight trading days is massive. It was right there with the other three snapbacks since the Financial Crisis, and proportionately speaking, it was the largest in the data that I looked at th

Negli ultimi tre mesi, le tensioni commerciali tra gli Stati Uniti e la Cina sono aumentate in modo massiccio, ma altri paesi, come il Messico, non sono sfuggiti a nuove minacce tariffarie. Come in passato, i segni di un'escalation nelle scaramucce commerciali hanno colpito duramente i prezzi delle attività rischiose, trascinando i prezzi azionari verso il basso e spingendo gli spread delle obbligazioni societarie verso l'alto. E poiché le banche centrali si sono allentate preventivamente in risposta alle oscure prospettive economiche e alle condizioni finanziarie più rigide, i prezzi delle attività rischiose sono rimbalzati mentre l'inflazione è rimasta ostinatamente bassa. In questo contesto, i rendimenti delle obbligazioni sovrane sono naturalmente diminuiti ulteriormente, a volte spinti dalla prospettiva di un rallentamento dell'attività economica e di un aumento dei rischi, ad altri dalle rassicuranti misure di allentamento delle banche centrali. Ad un certo pu

Weakness in euro-area manufacturing hit a climax this morning as German private sector activity plunged to a seven-year low. The  Germany Manufacturing PMI slumped  in September, dropping to 41.4, down from 44.7 in August, printing below the lowest sellside estimate (consensus of 44.4); worse, the German manufacturing recession is now spreading to the services sector, where the formerly resilient services PMI also slumped from 54.8 to 52.5, also missing the lowest analyst estimate, and collectively, resulting in the first composite PMI print below 50, or 49.1 to be precise, since April 2013. The rate of decline was one of the sharpest in seven years. Key findings of the report indicate business conditions across Germany continue to deteriorate with no end in sight.  Flash Germany PMI Composite Output Index (1) at 49.1 (Aug: 51.7). 83-month low. Flash Germany Services PMI Activity Index(2) at 52.5 (Aug: 54.8).  9-month low. Flash Germany Manufacturing PMI(3) at 41.4 (Aug: 43.5).  123-mo