Content area
Full Text
US CLO investors are questioning the staying power of the recent trend of CLO resets and refinancings, which have outstripped the pace of new issuance considerably in the past few weeks.
According Wells Fargo analysts, 18 deals were refinanced or reset in the third quarter. Between September 29 and October 10 the US CLO market priced only three true new issue deals totaling $1.7bn, compared to nine refinancing or reset transactions for $4.1bn.
The Wells Fargo analysts added that they expect the refinancing/reset market to remain active in the fourth quarter in the run up to the risk retention deadline on December 24.
However, there is one technical factor written into CLO language that could hamper refinancing activity in the fourth quarter.
"The one twist to all this refi/reset talk is that a lot of CLOs have language that say you can only refinance or...