Following widespread interest in the results of the first risk retention survey conducted by Maples Fiduciary in February 2016, we engaged with our US CLO manager clients again in November 2016 to provide an update on manager strategies and preparedness for risk retention.
managers planning to use a capitalised manager vehicle ("CMV") decreased from 25% in February 2016 to 20% by year end.
In addition, we noted a shift in the preferred structure towards MOA/C-MOAs with a slight departure from the CMV structure, together with a clear preference for taking a horizontal retention slice.
The results, which can be accessed by clicking here, were distributed at the Opal CLO Summit in December 2016 and have been published in a number of industry trade periodicals and magazines, including LCD/CLO Weekly, Creditflux and Structured Credit Investor.
As anticipated, Maples Fiduciary saw a significant increase in refinancing and reset activity during November and December prior to the 24 December 2016 risk retention effective date. Indeed, the Maples group acted on over 65% of the 2016 refinancings in the US CLO market.
At the time of writing, we continue to see an enormous volume of refinancing and reset activity of 2014 vintage CLOs as majority equity investors look to take advantage of tightening spreads. These refinancings are consistent with the terms and conditions described in Crescent Capital Group LP's SEC Staff No-Action Letter dated 17 July 2015, which allows for refinancing to be completed post the December 2016 deadline with the comfort that the SEC will not recommend enforcement of the risk retention rules if the refinancing is undertaken within the limited circumstances set out in the Crescent No-Action Letter.