In an exclusive LFI interview, David Saitowitz, Intermediate Capital Group’s head of US liquid credit, discusses the challenges market volatility poses for a CLO platform, and the possible outcomes from the tariff shocks challenging all capital markets. ICG had $5bn of US loan AUM and 15 active CLOs, as of September, according to the Fitch Ratings CLO Asset Manager Handbook.
In the current CLO market, volatility has created challenges in accurately pricing risk, with investor caution leading to multiple deals being put on hold, Saitowitz explains. The tightening of spreads on Triple A rated tranches seen earlier this year has given way to a more uncertain environment, as technical factors such as a decline in CLO refinancings and liquidations, along with fund outflows, have shifted market dynamics.
Investors are increasingly looking to alternatives like government bonds for stable returns, highlighting a complex landscape where both investors and issuers struggle to establish transaction levels.
LFI: Can you give us a high-level overview of the current CLO market situation?
ICG: Certainly. The market is struggling to price risk due to volatility. Earlier this year, spreads on Triple A tranches were tightening, but now investors are cautious, and many deals are on hold…
