European Market Update: EU CLO Sales Hit Post-GFC Record; IKEA in London
Globally, collateralized loan obligations have seen a record-breaking year, with Trepp recently reporting new issuance volumes surpassing $1 trillion globally. European CLOs specifically have continued to see success with the sale of EU CLOs recently reaching post-financial crisis records.
Trepp has continued to report the struggles facing brick-and-mortar retail since the onset of COVID given the growth of e-commerce. However, good news has arrived for the Oxford Street location that used to house Topshop, with IKEA set to open a new store in the seven-story space.
Sales of EU CLOs Reaches Post-GFC Record
Bloomberg reports that annual sales of new CLOs have reached a post-financial crisis record in Europe. This is a symbolic milestone for the asset class that was seen as a niche corner of the debt market. Nearly €30 billion of new deals have been priced this year. In the U.S., as Trepp has previously reported, volumes also hit a record earlier this month.
A rush for higher-yielding assets has highlighted the relative value of CLOs, which bundle junk-rated company loans into plain vanilla bonds. The increased issuance also reflects the fact that investors have piled into riskier debt as central bank stimulus programs depress returns in the safer parts of the debt market. Floating CLO rates only made them more attractive in the face of rising inflation.
A portfolio manager at Pinebridge Investments was cited by Bloomberg saying that “It’s the golden hour for credit,” because “When you look at CLOs, the relative value versus investment-grade, versus leveraged loans, versus high yield, versus other credit sectors continues to be very appealing.”
IKEA Purchases Oxford Circus Space
The iconic Topshop on Oxford Street closed during COVID and there has been speculation over what would come of the space in the future. The huge now-empty space has been purchased by flatpack Swedish light-industrial estate icons IKEA. IKEA reportedly acquired the space for nearly £400 million and is reportedly going through in January — a vote of confidence for London's real estate market.
The famous 214 Oxford Street site was up for sale from May 2021, and, according to The Guardian, had also seen interest from other brands including H&M Sports Direct. However, it looks like IKEA has won the race to the spot. The store will have a focus on home furnishings, with the full range available to buy for home delivery.
Peter Jelkeby, the head of Ikea’s UK and Ireland business was citing stating that “Even though online shopping continues to accelerate at a rapid pace, our physical stores (large and small), will always be an essential part of the Ikea experience – as places for inspiration and expertise, community and engagement.
“Bringing Ikea to the heart of Oxford Street – one of the most innovative, dynamic, and exciting retail destinations in the world – is a direct response to these societal shifts and an exciting step forward in our journey to becoming more accessible.”
The move reportedly forms part of Ikea’s strategy to open inner-city locations and bring the firm closer to customers. It is set to create around 150 new local jobs. Along with the creation of jobs, this purchase will without question influence the infamous Oxford Street and on the surrounding stores.
Trepp Community Call: The Global Impact of ESG
Trepp hosts a series of Community Calls to encourage dialogue between Academia and Industry participants. Join Trepp in three weeks for "A 360 Degree View: The Global Impact of ESG on CRE, CMBS, and CLOs." This call will bring a panel of experts together to explore how Environmental, Social, and Governance (ESG) initiatives and policies are changing the commercial real estate, fixed income, and structured finance markets. Register now.
CMBS Surveillance: Recent European Special Notices
Special Notice: Senior Borrower has deposited the following sums into the Debt Service Account in accordance with the terms of the Amendment and Waiver Letter (in addition to the amounts required to be paid on 29/Oct/2021 in accordance with the Senior Facility Agreement): (a) £13,500,314.63 to be applied in accordance with 17.3(c) of the Senior Facility Agreement on the Senior Loan Payment Dates on 31/Jan/2022, 29/Apr/2022, 29/Jul/2022 and 31/Oct/2022; and (b) £30,000,000 to be applied in prepayment of the Senior Loan on the Senior Loan Payment Date on 29/Oct/2021; The Effective Date occurred on 29/Oct/2021 and accordingly the Amendment and Waiver is in full force and effect from that date.
Deal Name: INTU SGS
Special Notice: FinCo linked to published Quarterly Report in respect of the period ending 30/Sep/2021 provided in the notice; FinCo intends to host an update call on 10/Nov/2021.
Deal Name: INTU SGS
Special Notice: As of Deadline on 28/Oct/2021 (i) Qualifying Secured Participants (acting through their Secured Participant Representative) and (ii) Noteholders, who individually or in aggregate hold Qualifying Debt or Notes (as applicable) having an aggregate Outstanding Principal Amount representing more than one third of the aggregate Outstanding Principal Amount of all the Qualifying Debt then outstanding had not registered in writing an objection to the Proposed Consensual Equity Restructuring with the Obligor Security Trustee; FinCo implemented the Proposed Consensual Equity Restructuring on 28/Oct/2021.
Deal Name: RIVER GREEN 2020
Special Notice: Servicer, acting on behalf of the Issuer as Majority Lender, has notified the LF Agent that it considered the evidence (provided to the LF Agent by the Company) that the Facility B Borrower had undertaken its best endeavors to remedy each Technical and Environmental Defect within the Remedy Period to be satisfactory and that as a result, it agreed to extend the Remedy Period to 31/Dec/2021; Company and the Majority Lender have therefore agreed that the Remedy Period shall be extended to 31/Dec/2021; additional details provided in the notice.
Trepp is acknowledged as the market leader in providing data and analytics to the CMBS, CRE & CLO markets. Trepp’s European Headquarters, located in central London, has teams focused on European data, modelling, and content within all three asset classes.
Disclaimer: The information provided is based on information generally available to the public from sources believed to be reliable.