International Financing Review March 7 2020^49STRUCTURED FINANCEpotential future communicable disease and
the risk that might pose to portfolios.”
CLOs are the biggest buyers in the
US$1.2trn US leveraged loan market, which
companies including American Airlines and
#ALLAWAYû'OLFûRELYûONûFORûlNANCINGûFORûDAILYû
operations and to back mergers and
acquisitions.
The funds, which sell slices of varying
seniority, from Triple A to B, to investors,
including insurance companies and banks,
may feel pressured as the companies whose
loans they purchase warn a slowdown in
operations due to the virus could hurt their
earnings.
Callaway, which tapped the loan market
for debt to back its acquisition of apparel
and equipment producer Jack Wolfskin, is
among borrowers that have warned
investors that the virus could disrupt
business. Callaway’s US$446m term loan is
owned by several US CLOs, according to LPC
Collateral data.
The golf equipment manufacturer said
this week that its suppliers werebeginning to resume operations but were
not at full capacity, and demand for
consumer products has not recovered in
affected areas in Asia, according to a
REGULATORYûlLING
Additional spreading could affect
Callaway’s ability to manufacture its
products, which could have a
hSIGNIlCANTûNEGATIVEûIMPACTvûONûITSûû
lNANCIALûRESULTS ûTHEûCOMPANYûSAIDûINû
THEûlLING
Callaway spokespeople did not return an
email requesting comment.
A mitigating factor for CLOs is the
DIVERSIlCATIONûOFûTHEIRûCOLLATERAL ûWHICHû
should help insulate portfolios from
downgrades of a single issuer or a number of
borrowers in one sector that result from a
virus-related issue, according to a February
28 report from Fitch Ratings.
But “the effect of the slowdown on
corporate issuers and subsequently CLOs
will ultimately depend on the operational
mEXIBILITYûTHESEûCOMPANIESûHAVEûANDû#,/û
managers’ active management ofportfolios”, Fitch analysts wrote in the
report.ASIA-PACIFIC MBS
MEDALLION REFINANCES 2015-1 NOTECOMMONWEALTH BANK OF AUSTRALIA priced the
A$553m (US$360m) MEDALLION 2015-1 Class A1-R
RMBS note last Friday at the wide end of initial
one-month BBSW plus 85bp–90bp guidance.
4HEûNEWûRElNANCINGûNOTEûHASûAû
YEARû
weighted-average life and 16.2% credit
support.
,ASTû.OVEMBER û#"!ûISSUEDûTHEûlRSTû2-"3û
linked to the risk-free Australian Overnight
Index Average rate, the A$1.5bn Medallion
2019-1 prime RMBS.
The issuer/originator then stated its
intention to reference Aonia for future
RMBS transactions, though this does not
NECESSARILYûINCLUDEûTHEûRElNANCINGûOFû
outstanding tranches linked to one-month
BBSW.MS+10 area, MS+10
area- US$4bn Aaa/AAA HSBC/JPM/MS/Nomura Asia 38%, Eur 31% Amers 25%, MEA 6%.
CB/OI 46%, Bks/Tsy/Corp 41%, AM/Ins/
PF 13%.
Sofr+26 area - US$560m, 16acs Aaa/AAA/AAA BMO/Citi/StCh/TD EMEA 41%, US 23%, UK 18%.Asia 18%.
Bks/Tsy 58%, CB/OI 27%, AM 15%.
MS+17 area,
MS+16 area - US$2.2bn, >85acs Aaa/AAA JPM/Nomura/RBC/TD EMEA 53%, Amers 28%, Asia19%. CB/OI
72%, Bks/Tsy 13%, FM/Ins 15%.
MS-5 area 2 €980m -/AA+ Barc/Deka/DB/Natx/Uni -
MS+3 area 4 - -/-/AAA BayernLB/JPM/NWM/NordLB -
MS+17 area - €370m -/-/AAA BayernLB/Deka/HSBC/Natx/TD -- -1 - -/AAA Deka/DZ/HSBC/Uni -
Sonia+85 area - £700m Aa3 HSBC/BofA/Barc -MS+19 area - - Aaa/AAA/AAA ZKB -
- -/AA+ HCM/SEB -
- -/AA+ HCM/SEB -
0 - - -/AA Danske -
- -/AA+ HCM/SEB -
T+185 area - - Baa1/BBB+ BofA/BNY/JPM/Miz -
T+150 area - - Baa1/BBB+ BofA/BNY/JPM/Miz -
T+125 area - - Baa1/BBB+ Citi/Barc/HSBC/MS -
T+155 area - - A2/A BNY/MUFG/Regions/Scotia/WFS -
T+180 area - - Baa1/BBB+ BofA/Barc/GS/JPM/WFS -
T+135 area - - Baa1/BBB+ BofA/Barc/GS/JPM/WFS -
T+105 area - - Baa1/BBB BofA/Barc/GS/JPM/WFS -
T+195 area - - Baa3/BBB/BBB BofA/Barc/GS/JPM/WFS -
T+150 area - - Baa3/BBB/BBB BofA/Barc/GS/JPM/WFS -
T+80/85 - - A1/A+/A+ BofA/MUFJ/Barc/Citi/JPM/Miz/MS -
T+110 area 2.5 US$3.3bn A2/AA/A+ BofA/GS/JPM/WFS -Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution6 IFR Bonds 2323 p 25 - 53 .indd 49 06 / 03 / 2020 19 : 18 : 10