Looming risk retention rules will lead to a decline in the pace of new U.S. CLOs coming to market and managers issuing new deals, according to Fitch Ratings in its latest Global CLO Quarterly report.

Despite a December flurry with 15 deals totaling $7.3 billion coming to market, new CLO issuance for 2015 ($93.1 billion) came in 20% lower than 2014 ($116.2 billion). A closer look also reveals fewer managers coming to market with new deals. Fitch reports that 28 managers issued a U.S. CLO during 2014 who did not come to market with a new deal in 2015.

Approximately 65% of Fitch-rated CLOs last quarter were either explicitly risk retention compliant or the manager or its affiliate had at least 5% of the proverbial 'skin in the game'. The remaining CLOs were issued by managers that investors viewed as having a high likelihood of satisfying risk retention when necessary.

'Any organizational structure changes and any risk retention financing that may transpire will be more closely scrutinized as more CLO managers seek to comply with the forthcoming risk retention rules,' said Senior Director Derek Miller.

Fitch's 'Global CLO Market Trends Quarterly' is available at 'www.fitchratings.com' or by clicking on the above link.

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

Global CLO Market Trends Quarterly

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=876568

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