Palmer Square Capital Launches European CLO Index
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Insights
The introduction of the Palmer Square CLO EUR Debt Index by Palmer Square Capital Management is a significant development for investors interested in the European collateralized loan obligation (CLO) market. This index provides a new tool for benchmarking investment performance against the broader European CLO debt landscape. From a market research perspective, the availability of such an index could enhance transparency and potentially lead to increased liquidity in the CLO market. By offering a breakdown by tranche, along with critical metrics like spread, yield and price, the index offers a granular view that was previously less accessible to investors.
Furthermore, the decision to make this index available for free, even to non-clients for a limited period, suggests a strategic move to position Palmer Square as a thought leader and go-to resource in the CLO space. This could attract new clients and solidify the firm's reputation, potentially translating into increased business and influencing its market share positively. The long-term impact on the firm's performance and the European CLO market's dynamics will depend on the index's adoption and the value investors derive from its use.
Palmer Square's launch of a CLO manager provided index marks a pivotal moment for the European CLO market. Historically, the lack of a manager-provided index has meant that investors had to rely on third-party benchmarks or internal assessments, which could vary significantly in terms of methodology and outcomes. The introduction of a standardized index could lead to more efficient pricing and better risk assessment for investors.
Considering Palmer Square's position as a leading issuer for European CLOs in terms of volume and deal count, the firm's deep involvement in the market could ensure that their index accurately reflects current market conditions. However, one must consider the potential conflict of interest, as the index is provided by an active market participant. It is essential for the index to maintain objectivity and reliability to be widely accepted. Investors would benefit from comparing this new index with other benchmarks to ensure it aligns with market trends and offers a true representation of the European CLO debt market.
The strategic move by Palmer Square to offer a new index for European CLO debt could have broader economic implications. A transparent and accessible index may encourage more participants to enter the CLO market, potentially increasing the depth and breadth of the market. This, in turn, could lead to a more efficient allocation of capital within the European economy, as CLOs are a critical component of the corporate debt market, providing liquidity to issuers and opportunities for investors.
However, it is important to monitor how this index influences market behavior. If widely adopted, it could become a benchmark that impacts pricing and investment decisions, possibly leading to market adjustments based on its reported metrics. The long-term economic effects will hinge on the index's accuracy, acceptance and the degree to which it enhances market function without inadvertently creating new systemic risks.
First publicly available, CLO manager provided index for European CLO debt
MISSION WOODS, Kan.--(BUSINESS WIRE)--
Palmer Square Capital Management, a credit-focused asset management firm with over
The Palmer Square CLO EUR Debt Index is a rules-based observable pricing and total return index for European CLO debt. It is the first broadly available CLO manager provided index for European CLO debt. The data is broken out by tranche and includes total return information and statistics such as spread, yield and price. The index will be available to all Palmer Square clients for free and to non-clients as a free 12-month trial.
Christopher Long, Chairman and CEO of Palmer Square, said, “Investors around the world are increasingly seeking to gain access to the dynamic and growing European CLO market. With the launch of our European index, we are pleased to provide these investors with a convenient, manager affiliated, daily benchmark that previously was not broadly available to help them make informed investment decisions as they navigate markets.”
Palmer Square has extensive credit investing experience across market cycles and is one of the most active issuers of CLOs. In 2023, the firm was leading issuer for European CLOs by volume and deal count. The firm is also an active third-party CLO investor, managing over
Market participants who are not current Palmer Square clients and are interested in accessing the data should reach out to Palmer Square to set up a trial.
About Palmer Square Capital Management
Founded in 2009 by Chris Long with major offices in
Please note: Individuals cannot invest directly in any index. Further, the securities issued under the CLO transaction noted herein have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in
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Prosek Partners
Josh Clarkson
646-818-9259
jclarkson@prosek.com
Source: Palmer Square Capital Management
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