zerohedge.com / by Tyler Durden on 02/29/2016 14:41
Supply all but vanished in the wake of the crisis but staged a comeback starting in 2012 and by 2014, issuance was running at a $125 billion per year clip. As we noted last week, that’s roughly the equivalent of how much auto loan-backed paper came to market last year.
The problem is that stress on US O&G occasioned by the Saudi’s quest to bankrupt America’s oil patch is contributing to what certainly looks like a HY meltdown and that, in turn, has very real consequences for CLO collateral pools. In fact, 1.4% of assets held by US CLOs have either been downgraded or placed on credit watch negative this year, according to S&P.
New issue spreads are rising, issuance is collapsing, and both S&P and Moody’s recently downgraded several CLO 2.0 tranches for the first time ever.
The post This Is How The Great CLO 2.0 Collapse Will Play Out appeared first on Silver For The People.
Thanks to BrotherJohnF