CLO Sales Pick Up The Pace With LIBOR Transition Ahead

Posted on November 5th, 2021 at 12:26 PM
CLO Sales Pick Up The Pace With LIBOR Transition Ahead

From the Desk of Jim Eccleston at Eccleston Law:

Industry experts anticipate that a record-setting pace of collateralized loan obligation (CLO) sales will continue as issuers prepare for an upcoming transition to a new benchmark. 

The London interbank offered rate must be discontinued by December 31, which likely will lead to heightened volatility in 2022 as CLOs seek new benchmarks. According to Barclays, some AAA investors and banks are informing managers that they prefer not to take a risk on LIBOR CLOs that may not close until January. CLOs often raise red flags from regulators and legislators as issuers seek to circumvent negative publicity regarding missed deadlines. 

Industry experts added that CLOs are not seeking to be the first to transition to new benchmarks unlike the Secured Overnight Financing Rate (SOFR). The inevitable transition may skyrocket CLO basis risk by creating a mismatch between the benchmarks utilized for assets and liabilities. Industry experts also predict that the shift from LIBOR may increase volatility for CLO values. Morgan Stanley recently announced that SOFR-linked loan issuance will continue throughout 2021, but investors should not anticipate any SOFR-linked CLOs until 2022. 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: eccleston, eccleston law, clo, libor, transition

Return to Archive



If the regulators are after you, and are trying to make a case against you, and you are going to contest their allegations against you, make sure you have the best securities industry defense lawyers, Eccleston Law Firm. My case was spun into a combination of penalties including fines, cash settlements, CE courses and suspension. They were the best I have seen in action. When all was said and done, they had done their magic, my situation was negotiated and settled with a simple "letter of caution" and a case closed without action. It is the most important legal business decision you will ever make, make it Eccleston Law.

Rick R.


June 14, 2024
Wells Fargo Fires Employees for Faking Work

Wells Fargo & Co. recently terminated over a dozen employees following an investigation into allegations of fake work activities.

June 13, 2024
FINRA Struggles to Revise Outside Business Rules

The Financial Industry Regulatory Authority’s (FINRA) attempt to update its rules on advisors’ outside business activities has stalled, according to Robert Colby, FINRA's chief legal officer.

June 12, 2024
Tax Court Denies Madoff Victims $8.2 Million Deduction

Victims of Bernie Madoff's Ponzi scheme, Christopher and Silvana Pascucci, cannot claim an $8.2 million tax deduction for their investment in life insurance premiums.