CLOs are one of the key drivers of growth in the broader Irish SPV sector. These vehicles, which are domiciled in Ireland, securitise mostly leveraged loans and high yield debt into tranches of differing risk.
The number of Irish CLOs has risen by 23.6% over the past year, demonstrating that Ireland is a favoured jurisdiction for locating these structures.
Q3-2019 saw an additional 16 CLOs coming onstream according to Central Bank of Ireland data, representing a €6.5bn increase in assets.
Central Bank of Ireland data, which is confirmed by our new entity-by-entity research, shows that the majority of CLO sponsors are located either in the UK or the US, in some cases acting through an Irish branch.
Most borrowers of the underlying loans are located in the euro area, with US and UK companies accounting for most of the remainder. CBI estimates show that around 85% of outstanding CLO loan assets are classified as ‘cov-lite’.
US investors own around 18% of Irish CLO debt, with UK investors owning around 13%, Japanese investors 13%, and German investors around 8%. Over half of CLO debt is held by investment funds.