Timing your entry into a new market is tricky. But when the number of potential competitors has doubled over the previous 12 months, things probably get a lot trickier. This is what has happened in the red-hot CLO market: there were 35 managers in the European CLO market in mid-2006 whereas little more than a year ago there were only 16. And although CLOs accounted for roughly 75% of the European cash CDO market in 2005, so far this year they account for a full 92%.
This rapid growth has largely resulted from the many US CLO managers that have set up shop in Europe. Several of these are US CLO managers with a private equity sponsor parent: Bain Capital, Carlyle Group and Blackstone Group are the obvious examples. But hedge funds have been moving into this space as well: London-based CQS brought its debut CLO in June via Morgan...
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