CLOs

Headlines have painted a nervous picture of the health of consumers across Europe. Simultaneously, rating agencies have upgraded their outlook on the same consumer assets to neutral. The short story is that, although there has been a mild weakening in performance metrics, the consumer has held up well and is ahead of our base case expectations in almost all areas.

A consumer loan ABS issued last week by Consors Finanz, a fully-owned subsidiary of BNP Personal Finance, highlights the remarkable appetite investors are currently showing for mezzanine ABS bonds.

Elena Rinaldi, Portfolio Management, wraps up the second quarter of 2024 for the Asset-Backed Securities (ABS) team. She notes that while financial markets experienced mixed performance and broader volatility, the ABS market remained relatively resilient and delivered strong performance.

Having been the best performing asset class across fixed income in 2023, collateralised loan obligations (CLOs) have spent the first half of this year on similar form with record levels of issuance meeting equally strong demand from a broadening range of investors.

The European asset-backed securities (ABS) market saw a record issuance last week with €5bn of primary issuance.

Following an incredible 2023, collateralised loan obligation (CLO) investors are again having a great year with the asset class outperforming the more traditional asset classes.

Douglas Charleston, Partner & Portfolio Management, concludes the first quarter in 2024 for the Asset-Backed Securities team, noting that while major economies remain resilient, the rates markets have undergone significant shifts, with central banks reassessing their rate cut expectations.

After delivering a stunning 2023, collateralised loan obligations (CLOs) were once again one of the top performers in Q1. That leaves us with the question, where do we go from here?

Aza Teeuwen reflects on a busy quarter for the Asset-Backed Securities team, highlighting the primary deals and trading that occurred all the way through the quarter until the end of December, the performance of ABS for the quarter, and his confidence that ABS is in a good position to carry its strong momentum into 2024.

Recently, our credit experts delved into the performance of the high-yield market, revealing how the maturity wall does not seem to be a significant challenge for most companies.

Elena Rinaldi gives an update on the market, highlighting the peak in rates in the quarter, the performance of ABS for the quarter, and delving deeper into the primary issuance activity over the summer months.

Last week Aza Teeuwen and our ABS team visited the Global ABS conference in Barcelona. One key discussion point in CLOs was around the lack of leveraged loan supply and the resultant sharp slowdown in the primary market