Industry Sees More Upside for CLO’s in 2014

According to a recently completed survey conducted by the Loan Syndications and Trading Association or “LSTA“, loan industry participants are very bullish about the continued growth in leveraged loan sales to non-bank investors.  A growing number of institutional investors and funds are being drawn to the floating rate features of syndicated loans as a protection against rising interest rates.

These third party sales could reach as high as US$650Billion in 2014, according to industry prognosticators.  Certainly many of these sales are finding their way directly to investors and mutual funds continue to be active in the asset class.  However, this expected growth can only be good for the red hot CLO marketplace.  Looking ahead to 2014, despite the headwinds associated with deliberations around risk retention rules, between the combination of new CLO program activity and the refinancing of older CLO programs, most predictions have the market continuing to grow rapidly in 2014.  One analyst projects 2014 CLO issuance levels to exceed US$125Billion.

About markferraris
Managing Principal Orchard Street Partners LLC

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