Low-rated Corporate Loans Wrap Up Record Year with $186bn in CLO Sales

Jan 3, 2022 | News

Investors’ search for higher yields and Wall Street’s shift to a new interest-rate benchmark powered a record year in sales of collateralized loan obligations—securities made of bundles of low-rated corporate loans.

Asset managers including Ares Management and PGIM were on pace to finish 2021 with more than $186bn in new CLO sales, according to Leveraged Commentary & Data. That is a record high in data going back to 2011, smashing 2018’s previous yearly record of $128.9 billion.

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New Mountain Capital, a defensive growth-oriented investment firm that manages more than $35bn across private equity, credit, and net lease real estate, announced the closing of a $507m collateralized loan obligation, New Mountain CLO III, in September 2021. This was the third CLO issued by New Mountain Capital, following its debut CLO in October 2020.

Värde Partners, a global alternative investment firm, closed a commercial real estate collateralized loan obligation in May 2021. This was the firm’s fourth and largest CRE CLO, and eighth securitization of commercial real estate collateral. The asset pool has an aggregate initial principal balance of $928 million and consists of 23 floating-rate mortgages secured by 29 commercial properties. Värde offered $759 million of bonds rated AAA through BBB.

Source: Wall Street Journal

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