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Alternative Market Briefing

CLOs, RMBS, risk transfer trades catching the eye of credit funds

Tuesday, November 19, 2013

amb
Chris Acito
Bailey McCann, Opalesque New York:

Opalesque has reported on indicators that suggest the long bull run for credit funds may be coming to an end. Conventional wisdom says that the opportunity set is dwindling, and the real potential for rising interest rates in the near-ish term will make credit investments less palatable. While this may be true, pockets of the credit universe are showing no signs of slowing down.

CLOs

"We really like new issue CLO equity right now," Chris Acito, CEO/CIO of Gapstow Capital Partners tells Opalesque. Gapstow is a multi-manager hedge fund with just over $1bn in assets under management. "Two years ago, you weren't seeing activity in this market like you are today."

CLO activity is indeed climbing to record levels. Just last week the Carlyle Group closed a $415m CLO fund the firm's sixth new-issue CLO this year, totaling four in the U.S. and two in Europe. Carlyle's third new-issue US CLO fund of 2013 closed in June at $517m. With the close of the latest CLO, Carlyle has raised more than $2.16bn in the US in 2013. Since the beginning of 2011, the firm has raised approximately $5.86bn of CLOs globally including the close last month of a E329.5m European CLO. Carlyle's structured credit/CLO business has $17.5bn in assets under management.

Riskier CLOs - so call......................

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