Eight key players involved in European CDOs recently gathered to talk about the impact of this summer's liquidity crisis and how the CDO and wider securitisation markets are likely to change. The consensus was that the demand/supply imbalance will eventually find a new equilibrium but banks will have to write down the overhang of underwater loan assets before a meaningful recovery can get underway. Given institutions are holding tens of billions of stranded leverage loans, assessing warehouse ri

Burgel: Mezzanine debt was actually starting to get priced wider from March/April onwards, before there were any sort of underlying issues. In May nothing priced above 225 – it didn’t work anymore. It came to the stage where we are saying: hang on, what do we do? We sold only one CLO in the last ten months because we could not see how we could get those things to work. Therefore, actually before all of this shock happened, pretty much by the time we actually hit June and another pricing flex cam

IFR: So do you think there is a possibility that some arrangers might not be in the market given their warehouse lines are full and underwater? Combe: The problem with leveraged loan arrangers, and they are all slightly different, is to do with the hung syndications. As I’m sure all of you know in Europe we think there is about €70bn of hung syndications right now. The problem in the US is much worse. That short-term problem has a long-term effect. In the short-term, those people will not underw

IFR: I would like kick off with a look at the corporate landscape. Ian, could you start us off with an overview of corporate defaults. What is your reading for the next couple of years? Ian Perrin (Moody’s): I think the key characteristic of the market over the last couple of years is that there has really been a negligible default rate which has really been helpful for growth of the CLO business and the leveraged finance business overall. There has been more pressure recently both because of hi

Alan Packman - Lloyds TSB Alan Packman joined Lloyds TSB in August 2006 to set up and run Structured Finance proprietary trading. The business has a global mandate, in terms of asset class, geography, and product (cash/CDS/index), taking relative value views across the capital structure. Alan was previously employed as a senior syndicate manager/ABS trader at Dresdner Kleinwort. Ian Kilcullen - Key Capital Ian Kilcullen is senior portfolio manager at Key Capital, a Dublin based investment adviso