CLO turnaround

US CLO issuance seemed to have hit its peak in 2014 when a total of $123.5 billion of CLOs hit the market.

While this figure has yet to be bested, the slow decline in the size of new CLOs seen between 2014 and 2016 seems to have come to an end in 2017. The fall was largely thought to be due to CLOs being included in US risk retention regulations.

Up to November last year, $108 billion had been raised and CLO managers are positive about the future.

A recent case brought against the Securities and Exchange Commission by the Loan Syndications and Trading Association to exempt CLOs from risk retention rules could tip the balance back in favour of CLOs. While it initially lost the case in a federal district court, a higher court has ruled in favour of the CLO managers.