As the leveraged loan market woke up this past January, as confidence in the economy and rate expectations grew, so the CLO market has rebounded. Not just in the US, as we detailed last week, but in Europe as well.
Our friends at Creditflux highlighted this phenomenon, quoting one leading manager as saying: “Given the number of CLO issuances year to date, we see 2024 breaking records for gross new issue volumes in Europe.”
As our Chart of the Week shows, European issuance year-to-date totals about €27 billion 2024, almost double 2023’s €15 billion of activity, per PitchBook LCD. Contrast that with US issuance of about $115 billion and $60 billion, respectively for this year and last year.
From a pricing perspective, both US and Europe have seen the cost of triple-A liabilities come down in the same way loan spreads have compressed. Recent European vehicles have been issued at their tights slightly below 130 bps with their US counterparts a bit above that...
“The thing that really worries us is the level of valuations.” – Roger Aliaga-Diaz, global head of portfolio construction and chief Americas economist, Vanguard.
Featuring Charts
Chart of the Week: Euro Stars
New CLO issuance in Europe this year is outpacing 2023 by a wide margin. Source: Pitchbook | LCD(Past performance is no guarantee of future results.)
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Chart of the Week: Security Issues
The prospect of lower interest rates has boosted new CLO issuance at a record pace. Source: CreditFlux(Past performance is no guarantee of future results.)
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Chart of the Week: The Pendulum Always Swings
Refinancings by direct lenders returned last quarter to outweigh BSL takeouts. Source: PitchBook LCD, data through June 30, 2024(Past performance is no guarantee of future results.)
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Chart of the Week: Lower Risk, Higher Yield
Among a basket of traded credit strategies, leveraged loans are showing well. Source: The Daily Shot(Past performance is no guarantee of future results.)
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Chart of the Week: Feeling and Dealing
Consumers gloomy, but keep pushing stock prices higher. Source: Bloomberg, The Conference Board(Past performance is no guarantee of future results.)
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Chart of the Week: Be Direct
Private capital fundraising for the first quarter was predominantly for direct lending. Source: Preqin Pro(Past performance is no guarantee of future results.)
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Middle Market & Private Credit – 7/22/2024
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Fundraising revival on hold There were some signs of improvement in the second quarter, but raising new private debt capital was still a struggle in the first six months of 2024. The first half of 2024 did not offer much consolation to those awaiting clear signs of a private debt fundraising revival. Private Debt Investor’s…
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1H24 New-issue CLO volume sets new record for first six months at over US$99.5bn Over US$99.5bn of new US CLO issuance has been completed through the end of June 2024, an increase of over 77% compared to the same time last year and a 23% gain compared to the prior record half year total of…
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