Fitch: Market Jitters Grinding New U.S. CLO Issuance to a Halt

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NEW YORK--(BUSINESS WIRE)-- Link to Fitch Ratings' Report: U.S. CLO Market Quarterly

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=654717

A strong first-half of newly issued U.S. CLOs has given way to market trepidation in recent weeks largely due to the unrest in Europe, according to Fitch Ratings in its latest CLO Market Quarterly report.

While six CLOs have come to market during third quarter-2011, only two have priced since August due to increased market jitters. Additionally, CDS spreads on 'AAA' have widened 20-30 bps compared to CLOs that were originated during 2Q'11. However, spread widening alone will not halt new issuance because discounts on corporate loans is likely to make new issuance attractive for equity investors.

Also likely to help reverse the trend is the continued stable performance of existing U.S. CLOs. Rating actions for 3Q'11 were almost exclusively affirmations thanks in part to the stable leveraged loan market and historically low defaults. Affirmations are likely to continue into next year, which bodes well for the Stable Outlook on Fitch-rated CLOs.

Fitch's 'U.S. CLO Market Quarterly,' and 'U.S. Leveraged Finance Market Quarterly' are both available at 'www.fitchratings.com' under 'Latest Research' or by clicking on the corresponding links.

Additional information is available at 'www.fitchratings.com'

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