LCD reveals that since the introduction of risk retention, managers are adopting both vertical and horizontal slices to comply. A number of managers have created vehicles to provide capital necessary to be compliant with risk retention. In addition, some firms have acquired existing collateralized loan obligation (CLO) managers who are looking for capital to be compliant.
The capital required for risk retention compliance is likely one of the factors that is driving the sale of smaller funds to well capitalized non-CLO managers.
Leveraged Commentary & Data (LCD) Excerpt
“Over 100 new issues have been issued in the U.S. in 2017. Another two managers, OFS CLO Management and Canyon CLO Partners, priced new issues last week, bringing the total number of managers issuing this year to 69.
Volume statistics for 2017 are as follows:
· U.S. — $56.78 billion from 101 deals, versus $29.94 billion from 69 deals in the same period last year.
· Europe — €10.09 billion from 25 deals, versus €9.31 billion from 23 deals in the same period last year.
· Global — $67.88 billion from 126 deals, versus $40.38 billion from 92 deals in the same period last year."
According to LCD journalists Andrew Park and Luke Millar, a number of firms continue to look to expand into CLO management through the acquisition of an existing manager seeking capital.
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