These are among the findings of Appleby’s latest CLO Insider report, which provides data, insight and analysis on the CLO market, focusing on the first six months of 2014.“The first half of 2014 not only marked the biggest dollar amount in terms of CLOs priced since the market started picking up in 2010, but the average deal size is well above previous six month periods in recent years,” said Julian Black, the Cayman-based Partner and Global Head of Structured Finance at Appleby. “Investors continue to recognise that CLOs are unlike ABS CDOs in that they are diversified, have strong performance history and a reassuring level of transparency and oversight by third parties.”
At USD531m, the average deal size was up 14% over the second half of 2013 and 12% when compared to the average of the full year of 2013. Meanwhile, total value of CLOs priced in the first half of the year was up 53% when compared to the last half of 2013.
“We see robust issuance for CLOs going forward; the market is flourishing and our pipeline is well-fuelled to the end of 2014 and beyond,” said George Bashforth, Head of Directorship Services, Appleby Trust (Cayman) Ltd. “Our CLO forecast remains strong, and we expect the full year to round-out at between the USD100-120bn range.”
The report found that a core set of Arrangers continue to dominate the CLO market, with Citigroup taking the top position again for the six-month period.
The top 10 Arrangers account for 86% of the total for CLOs priced during January-June 2014.
The top ten Managers for the first half of 2014 have closed 18% of the total of 119 CLOs priced. Of the 119, 87 individual Managers have participated, of which 58 have issued one deal, 26 issued two deals and three issued three deals, says the report. Appleby also notes that a number of the big private equity houses have done their debut deal during the period.
There are a number of key themes that emerge from the statistics:
CLOs with a total aggregate value of USD63.2bn priced in the first six months of 2014, surpassing the total for the previous half year period by USD22bn (53%).
Average deal size was USD531m, an increase of 14% over the second half of 2013, and 12% more than the full year average for 2013 (USD473m).
The top ten deals by value for the first half of the year represented 15% of the value for all deals for the period. Average deal size for this group was USD927m.
The average AAA spread for deals closed between January and June 2014 was 149bps, compared to 143bps for the previous period.
A core set of Arrangers continue to dominate the CLO market, with Citigroup leading the ranking for the six month period, closing 18 deals valued at USD9bn.
Download the H1 2014 CLO Insider report
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The Appleby CLO Insider report details CLO activity globally in the first half of 2014 using public information from a number of different sources including but not exclusively: LCD, Creditflux, Standard & Poors, Moodys, Fitch and Securitization Intelligence. The date range is 01/01/2014 – 30/06/2014 inclusive. Deal status is as priced within the time period covered. Not all deals are reported immediately, so the figures are subject to change as new information becomes available.