Sat, Mar 28, 2020
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

S&P: European CLOs not immune to effects of Covid-19

Thursday, March 26, 2020

Laxman Pai, Opalesque Asia:

The European collateralized loan obligation (CLO) market, like most other sectors, is not completely resistant to the effects of the COVID-19 pandemic, pointed out a study.

An extended period of stress, brought on by the pandemic, may put downward pressure on European leveraged loan and CLO ratings, according to a new report by S&P Global Ratings.

"In the short term, we do not expect rated European CLO transactions to experience significant downgrades," it said.

Key transaction indicators such as the level of 'CCC' category rated assets, the proportion of defaulted assets, and over-collateralization cushions, suggest transactions are protected from a degree of deterioration in portfolio credit quality.

However, an extended period of stress may put downward pressure on S&P CLO ratings, initially affecting speculative-grade tranches.

"Although economic data is currently limited, our short-term macroeconomic outlook for Europe has deteriorated and we now expect a contraction in Eurozone GDP of 0.5%-1.0% in 2020, revised down from our previous forecast of 0.5% growth," it said.

COVID-19 related disruption will affect economic activity in the first half of the year, with a particularly severe hit in the second quarter as near-lockdown measures adopted across Europe dampen the real economy.

"Considering the speculative-grade corporate rating actions that we have taken since the emergence of COVID-19, several of the affecte......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. PE/VC: Unicorns sometimes sting, Private equity at crossroads as rout offers deals, curbs lending, S&P survey shows sagging prospects for private equity[more]

    Unicorns sometimes sting From Venture capital firms are on a roll. Some 259 U.S. venture capital funds amassed $46.3 billion in 2019, the second highest by amount of capital raised and number of funds since 2006, according to the PitchBook-NVCA Venture Monitor. The biggest f

  2. Study: Three threats to hedge funds, Institutions seeing more private credit risks[more]

    Three threats to hedge funds From All About Alpha: A recent paper by a scholar at Tilburg University and a market participant at Robeco outlines the difficulties that the hedge fund industry has faced over the last decade. These problems arose, at least in part, from the democratization o

  3. Hedge fund Solus to close flagship investment vehicle[more]

    From FT: Solus Alternative Asset Management, one of the best known specialists in distressed investments, is closing its flagship fund after suffering a combination of heavy redemptions and poor performance. The hedge fund, which as recently as November managed $4.3bn in assets, is one of the fi

  4. Coronavirus 'possibly the biggest economic event of all our lifetimes', 'Big short' Michael Burry has a bearish bet and warns of a selling stampede, Investors' Black Death fear driving panic, says Witan Investment Trust chief Andrew Bell[more]

    Coronavirus 'possibly the biggest economic event of all our lifetimes' A former macro fund manager said on Thursday that the economic impact of the coronavirus - which is shaving trillions off the stock market and exerting a domino effect on the world economy - might be even worse than th

  5. Investing: As markets plunge, short sellers make hay, Time to buy, says GMO[more]

    As markets plunge, short sellers make hay From Institutional Investor: Short sellers floundered during the bull market. But as the market tides have turned, so too have their fortunes. "Some people haven't invested in hedge funds for a very long time," said Mark Roberts, owner of sh