News Column

Fitch Virtual Investor Meeting: Volcker Rule Still Clouds U.S. CLOs as New Deals Surge

June 26, 2014



NEW YORK--(BUSINESS WIRE)-- U.S. CLO issuance has reached a crescendo in recent months and appears on target to eclipse $100 billion for the year, though the newly enacted Volcker Rule is still forcing many CLO investors to the sidelines, according to Fitch Ratings in the latest entry to its U.S. structured finance virtual investor video series.

Following a tepid start to 2014, new CLO issuance has jumped significantly of late, prompting market some experts to alter forecasts. CLO issuance for 2014 to date now stands at roughly $58 billion as of the end of June, with some experts now predicting issuance to top $100 billion for the year (versus $85 billion for 2013). Managing Director Kevin Kendra attributed a primary reason for the surge to the continued strong demand for floating paper and the fact that CLOs are one of the few natural asset classes to provide floating rate paper.

Though some regulations recently came into play and forced some natural CLO investors to the sidelines, it has opened the field for new investors to jump in, thus keeping CLO issuance levels robust. The piece of legislation throwing the largest monkey wrench into the sector, not surprisingly, is the Volcker Rule, which Kendra said continues to affect every aspect of the CLO market. All deals securitized this year address Volcker compliance while outstanding deals are in the process of complying with the new rule.

As part of Fitch's new investor video series, the rating agency's U.S. structured finance group heads discuss hot topics on investors' minds and how Fitch is addressing these topics, be it on specific deals, regulatory issues or even ways to enhance Fitch's research products. The video series will be available on Fitch's 'Multimedia' page at 'www.fitchratings.com'. Questions can be emailed to 'sfinvestor@fitchratings.com'

Additional information is available on the following page:

'http://info.fitchratings.com/VirtualInvestorMeetings/'

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

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Kevin Kendra

Head of U.S. Structured Credit

+1-212-908-0760

Fitch Ratings Inc., 33 Whitehall Street, New York, NY, 10004

or

Kevin Duignan

Global Head of Securitization and Covered Bonds

+1-212-908-0630

or

Zanda Lynn

Managing Director, Business and Relationship Management

+1-212-908-0601

or

Winnie Fong

Senior Director, Business and Relationship Management - US Structured Credit

+1-212-908-9139

or

Media Relations

Sandro Scenga, New York, +1 212-908-0278

sandro.scenga@fitchratings.com

Source: Fitch Ratings


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Source: Business Wire