TMF Group's latest trends report offers insights on the current trends in the CLO market, and provides an outlook of the market expectations, challenges, and developments.
- Most respondents believe 2017's CLO issuance will be impacted by risk retention regulations
- More than 3/4 believe regulators are underestimating the impact of proposed and implemented regulations for the financial markets in general
Several emerging risks could cause a dent in the Collateralised Loan Obligation (CLO) market, according to the latest TMF Group Trends report.
The report, TMF Group Trends: Taking the pulse of the CLO market, canvassed the views of a group of CLO managers and Structured Finance experts in Europe and the US to offer insights on the current trends in the CLO market, and provide an outlook of the market expectations, challenges, and developments.
Key findings include:
- Most experts believe 2017's issuance will be impacted by risk retention regulations as in 2016
- Almost half of the experts say the Euro CLO 2017 issuance will be between €13bn and €15bn
- CLO demand in the US is shrinking due to the implementation of risk retention and the lack of positive effects of quantitative easing.
Huub Mourits, TMF Group's Head of Structured Finance Services, commented:
"Economies in Europe are growing and credit fundamentals seem positive, which is translating into demand for collateralised loan obligations, more commonly known as CLOs. It's part of a search for yield without undue risk, and is bringing in both new and 'old' investors.
"Yet several emerging risks could cause a dent in the CLO market - including geopolitical developments, the effects of quantitative easing (QE), and mooted increases in risk-retention regulations. However, the biggest issue we foresee in the next 12 to 18 months is loan supply - without loans, there are no CLOs, and loan numbers are closely watched by the market."
Click here to download the full report.
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