Salient to Investors:
Citigroup said pension funds bought 8% of the top-rated US CLOs, which slice high-yield loans into securities with varying risks , and 7% of the riskier mezzanine notes in Half1, 2015, versus minimal amounts a few years ago. Pension purchases accounting for 26% of new top-rated debt in the smaller European market.
Maggie Wang at Citigroup said the asset class performed tremendously well through the crisis, with less than 1% of speculative-grade slices defaulting.
Banks bought 38% of AAA rated US securities sold through June, their lowest amount since the 2008 financial crisis and down from 85% in 2012. Banks bought 9% of mezzanine CLO notes sold this year, a post-crisis low, and down from 35% in 2012.
Asset managers bought 35% of the top-rated debt this year, and insurers bought 17%.
Read the full article at http://www.bloomberg.com/news/articles/2015-07-22/pension-funds-hunting-yield-return-to-bonds-tied-to-risky-loans
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