Weekly Wrap: TALF funds largely absent from ABS dealmaking
Deals, trends and research in structured finance and asset-backed securities for the week of Sept. 4-10
By
Glen Fest
CDOs
KKR Looks to boost private credit bets in asset-based financing
KKR & Co. is looking to grow its asset-based private lending business to capitalize on a retreat by banks and more traditional market participants in the wake of the coronavirus pandemic that has led to mis-priced risk.
Opinion: First ETF for CLOs is ultra-safe. No, seriously.
The debut fund chose an unmistakable ticker (AAA) to market the relative safety of the CLO that is often unfairly attributed with the risks of the pre-crisis CDO.
Lenders flowing back into CRE CLO market
A three-month drought in CRE CLO issuance came to an end this week with new deals from Exantas and A10 Capital.
By
Glen Fest
Weekly Wrap: Qualifying what ‘QM’ means
Deals, trends and research in structured finance and asset-backed securities for the week of Aug. 28-Sept.3
By
Glen Fest
Fitch: Structured finance faces legacy Libor challenges
More than 2,500 Fitch-rated structured finance transactions face significant challenges transitioning from Libor to an alternative floating-rate benchmark, but the ratings agency doesn’t foresee that resulting in potential ratings downgrades until 2022.
By
John Hintze
Hildene packages community bank debt into new CDO offering
The class A notes, secured by legacy trust-preferreds and subordinated debt of institutions, carry an investment-grade A1 rating from Moody's. That rating is slightly lower than a prior Hildene CDO, due to elevated pandemic risk to bank profitability.
By
Glen Fest
‘Hidden’ defaults set to soar as recession squeezes firms
The worst recession since the Great Depression is prompting indebted companies to default, and increasingly more will do so in a way that’s harder for investors to detect.
Wave of U.S. bankruptcies builds toward worst run in many years
First, J. Crew. Now Neiman Marcus. Flashing red: J.C. Penney, Hertz and many more. The coronavirus has crushed the life out of some venerable household names.
CLO engineering is no match for Covid-19 as payments get cut off
Of 900 deals reporting data over the last month, 21% have narrowed or eliminated payments to the equity. Some analysts expect about one in three deals will eventually limit payments to their riskiest securities.
Apollo, employees face $1 billion in clawbacks on rout
Apollo Global Management Inc. faces the prospect of having to hand back earlier profits from several of its funds as its holdings were hit hard by the economic fallout from the coronavirus pandemic.
T-Mobile, Delta deals signal an opening in leveraged loan sales
The U.S. leveraged loan market is springing back to life with new deals for T-Mobile US Inc. and Delta Air Lines on deck for investors willing to take on risk.
Fitch: Corporate defaults headed to five-year high
Rising default levels have produced strain on many collateralized loan obligations, many of which are now approaching breaches of covenant tests on minimum weighted-average ratings factors and maximum holdings of triple-C rated loan assets.
By
Glen Fest
Pimco steps up distressed bet with another $3 billion fund
The Distressed Credit Opportunities Fund III money pool, dubbed Disco III, will target leveraged loans, high-yield bonds and collateralized loan obligations.
Moody’s shake-up: Hundreds of CLO notes placed on downgrade review
Moody’s Investors Service has placed hundreds of non-senior U.S. CLO tranches under review for downgrade, affecting 358 broadly syndicated loan-backed portfolios as Moody’s measures the ongoing economic shocks of the coronavirus outbreak.
By
Glen Fest
Analysts: TALF will have limited impact on reviving CLO new issuance
Bank research reports note the loans will only apply to purchases of CLO notes backed by newly issued leveraged loans. Most recently launched deals involve warehoused or distressed secondary-market loans ineligible for TALF.
By
Glen Fest
Fitch: Stricter CLO testing may bring more lower-note downgrade reviews
Fitch expects a majority of European CLO junior notes to be placed on a potential downgrade watch due to enhanced evaluation for coronavirus-related stresses.
By
Glen Fest
Opinion: Distressed-debt vultures might already be too late
Hedge funds are making headlines daily with plans to capitalize on this rapid shift in the outlook, contending the market presents a once-in-a-lifetime opportunity
Opinion: Fallen angels are coming and the Fed can’t save them
Dramatic Fed intervention may steady some markets, but unless something changes — and, judging by the last two weeks, it very well could — the central bank won’t be there to save fallen angels. Which brave investors will step up?
Leveraged-loan stress prompts U.S. to discuss ways to ease pain
One option could be issuing an announcement that makes clear regulators won’t likely object to risky funding arrangements that they’ve previously frowned upon, said the person who requested anonymity because the discussions might not lead to any actions.
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