9.12.21
The Wall Street Journal (WSJ) reports a substantial spike in CLO sales following expectations set by the official sector that no new contracts should be indexed to LIBOR after 2021. With August usually a slow month for the market, CLO U.S. issuance reached $19.2 billion, a monthly record in data going back a decade, according to S&P Global Market Intelligence’s LCD. This recent trend shows investor demand has increased exponentially, propelling CLO managers to swiftly close more deals in advance of potential market disruptions that might stem from the LIBOR transition. The WSJ also reports that a wave of CLO refinancings this year allowed some managers to include fallback language shifting to SOFR in their offerings. Market observers expect new CLO sales to remain high in September and new ones tied to SOFR to pick up in the fourth quarter.