Loan spread tightening squeezes CLO arbitrage for managers

After a rampant start to the year, collateralised loan obligations gave back most of their year-to-date gains as macroeconomic risks interrupted the corporate credit rally. But with spreads on the underlying loans continuing to tighten, a squeeze in the arbitrage for CLO managers is threatening to act as a deterrent to new issuance

A question of balance: CLOs need an equilibrium between asset and liability spreads

With combined US and European year-to-date supply running at around $2 billion at the end of the first quarter, investor uptake of new collateralised loan obligations is on track to beat last year’s $4.3 billion by a significant margin. Indeed, dealers have recently confirmed their expectations for 2011 issuance of between $10 billion and $15 billion.

Although this is a far cry from the $80 billion printed at the height of the structured finance boom, investors say the product’s ability to

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to View our subscription options

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here