The Future of the European CLOs

Read Simon Gold's interview, ISP Group’s Senior CLO Portfolio Manager, published in Creditflux magazine.

Simon Gold agrees that equity has moved into a zero-sum-game type of environment, where winners and losers will be more distinctly evident in 2021.  He says ISP Group remains invested in CLO equity but is focused on the potential for changes in the yield curve and broader macro implications.

New issue equity, however, looks spreads.  Triple As are also cheap relative to comparable fixed income asset classes, and they benefit from embedded Euribor floors.

For Simon Gold, mezzanine, in particular CLO double Bs, looks relatively attractive on a long-term basis, with longer duration risk trading well into the 600s on a discount margin basis. “The tights for this product were 460-490 DM in 2017 and over several years,” he says.  “Double Bs have only traded wider than 700 DM for relatively brief periods post financial crisis.”

Source: Creditflux, Credit Rendezvous, January 2021

Confidentiality Notice and Disclaimer
This document is prepared by ISP Securities Ltd., Zurich, exclusively for qualified/professional investors. It is designated to the person having received it from a representative of ISP Securities Ltd. and not intended for any other person. This document must not be made publicly available. This document is for information purposes only and is neither intended for nor targeted at any person who by domicile or nationality is prohibited to receive such information according to applicable law and regulations. This document is not intended to constitute an offer or solicitation nor a recommendation or advertisement for the purchase or sale of products or services and it is neither legal nor investment advice. While ISP Securities Ltd. makes reasonable efforts to obtain information from sources which it believes to be reliable, ISP Securities Ltd. makes no representation or warranty as to the accuracy, reliability or completeness of the information.
Unless otherwise stated, all figures are unaudited. The development of the values mentioned in this document originates in the past. Past performance is no guarantee for future performance. Each investment bears risks, such as value and profit fluctuations. Investments in foreign currencies may be subject to currency exchange rates. Particularly, ISP Securities Ltd. recommends that the recipient, if need be by consulting professional guidance, assess the information in consideration of his personal situation with regard to legal, regulatory and tax consequences that might be invoked. None of the information contained in this document constitutes financial advice or analysis within the meaning of the Swiss Bankers Association’s Directives on the Independence of Financial Research.

Our strength. Our people.

Our people and their combined skills, characters, and experiences represent our greatest assets. ISP Group is home to a team of over 110 highly qualified and motivated experts, focused and dedicated to help our clients reach their individual financial goals.