US issuance of Collateralised Loan Obligation (CLO) funds is set to rise following a US Court of Appeal decision on 9 February exempting them from Dodd-Frank risk-retention rules. The ruling should make it easier for smaller managers to raise deals. In the first quarter of 2017, CDOs issued by banks in China and India accounted for more than half of all deals worth over $1 billion, according to data compiled by Bloomberg. Morgan Stanley increased its 2018 US CLO forecast by $10bn to $110bn following the ruling, and Deutsche Bank raised its forecast to $120bn from $110bn. CLO issuance increased more than 700% by volume in the year to 16 February, compared with the same period in 2017.
US issuance of Collateralised Loan Obligation (CLO) funds is set to rise following a US Court of Appeal decision on 9 February exempting them from Dodd-Frank risk-retention rules. The ruling should make it easier for smaller managers to raise deals. It removes the requirement that managers hold 5% of the capital in their funds. Morgan Stanley increased its 2018 US CLO forecast by $10bn to $110bn following the ruling, and Deutsche Bank raised its forecast to $120bn from $110bn. CLO issuance increased more than 700% by volume in the year to 16 February, compared with the same period in 2017.