Banks Keep European CLO Market Alive by Buying Their Own Product
- Arrangers have been buying up AAA portions of CLO deals
- Yields of 4% to 5% make AAAs ‘compelling’: Morgan Stanley
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European banks are snapping up large pieces of their own collateralized loan obligations, keeping the market for CLOs afloat in the absence of the US and Japanese banks that traditionally make up the bulk of the buyer base.
French bank Societe Generale SA arranged its first CLOs since the Global Financial Crisis in November, and then following an example by Deutsche Bank AG earlier in the year, it also played a key role in getting the deals out the door by purchasing a chunk of the AAA -- or safest -- bonds. In doing so, these banks are hoping they can keep the wheels turning until more takers materialize.