Deals
The Bottom Is About to Fall Out for This Credit Market
- In a vicious cycle, more than $175 billion of CLOs refinance
- These refinancings would further squeeze margins on loans
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One of the last hurdles preventing riskier companies from slashing borrowing costs in an already red-hot leveraged loan market is crumbling.
Managers of collateralized loan obligations, the biggest buyers of U.S. leveraged loans, have started to give in to an unprecedented surge of repricings of the debt they hold in their portfolios. More than $175 billion of CLOs have refinanced in the last 12 months, up from less than $10 billion in the prior one-year period, according to data compiled by Bloomberg.