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 published by ISP Group Ltd., Zurich, for qualified investors only. It is for information purposes only and does not explicitly target any person who by domicile or nationality is prohibited to receive such information according to applicable law.
While ISP Group Ltd. uses 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.
This document is neither an offer or solicitation nor a recommendation or advertisement for the purchase or sale of financial products or financials services and does not discharge the recipient from his own judgment.
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 Group 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 on this document constitutes financial advice or analysis within the meaning of the Swiss Bankers Association's Directives on the Independence of Financial Research.