CLOs Attract Domestic and Foreign Banks, Pushing Up Loan Prices

Banks from Wells Fargo & Co. to smaller Japanese lenders are flocking to top-rated collateralized loan obligation deals, pushing up secondary prices for buyout debt.

JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo have been buying AAA rated CLO securities in bulk, three years after a market-wide pull back from such securities. The $1.3 trillion CLO market has welcomed renewed appetite from other buyers, such as Japanese firms JA Bank Osaka and Rakuten Bank, which are both deploying capital into CLO deals.

“The CLO AAA market is unique because it’s the only large floating-rate asset ...