CLOs

The European asset-backed securities (ABS) market saw a record issuance last week with €5bn of primary issuance.

Following an incredible 2023, collateralised loan obligation (CLO) investors are again having a great year with the asset class outperforming the more traditional asset classes.

After delivering a stunning 2023, collateralised loan obligations (CLOs) were once again one of the top performers in Q1. That leaves us with the question, where do we go from here?

Recently, our credit experts delved into the performance of the high-yield market, revealing how the maturity wall does not seem to be a significant challenge for most companies.

Last week Aza Teeuwen and our ABS team visited the Global ABS conference in Barcelona. One key discussion point in CLOs was around the lack of leveraged loan supply and the resultant sharp slowdown in the primary market

European Asset Backed Securities has been one of the few asset classes that has showed positive performance this year, Aza Teeuwen answers the million dollar question, how do you position for this?

As we approach the end of the economic cycle, tighter documentation is becoming increasingly important in providing downside protection against credit and extension risk of CLOs, says Pauline Quirin.

With Norinchukin Bank reportedly looking again at CLOs, Aza Teeuwen looks at the potential impact the return of the one of the market’s biggest buyers might have on spreads.

Strong performance across markets in January has left some investors feeling they’ve missed out on the rally in bonds. No need to worry, says Felipe Villarroel.

Having done its job of delivering lower volatility and better performance than mainstream bond markets in 2022, the income and defensive characteristics of European ABS look equally compelling in 2023, says Doug Charleston.

While yields have soared in recent months and created a broad buying opportunity in fixed income, Aza Teeuwen says investors should look at floating rate bonds to benefit from higher coupons today.

European ABS is enjoying a spurt of new issuance and a parallel rally in spreads, with investors having entered the new year with cash to invest and buoyed by renewed hope around inflation and monetary policy, says Pauline Quirin.