LibreMax hopes for clear skies ahead with CAVU platform

The US CLO market is holding up well with new issuance expected to reach USD135 billion in 2019. This has prompted TowerBrook Capital Partners to set up a new platform, CAVU, with LibreMax Capital. And with PineBridge Investments suggesting there is significant relative value in CLOs, it would seem to be a good time to get the CAVU platform off the ground. 

The supply dynamics for collateralized loan obligation (CLO) funds – the biggest buyers of leveraged loans – are set to remain favourable for 2019 in the US, with banks forecasting that approximately USD135 billion of CLO new issuance could be seen. 

This is good news for CLO managers and investors alike. Indeed, the long-term economics of CLOs, which aim to deliver uncorrelated returns over a five- to seven-year period, on average, and the opportunity to harvest capital gains as well as current yield, are piquing the interest of private equity groups. 

This is evidenced by the recent announcement that TowerBrook Capital Partners LP, a multi-billion dollar PE group, have joined forces with New York-based LibreMax Capital, a structured credit specialist asset manager established by Greg Lippmann, to create CAVU Investment Partners.