Sales of CLOs at strongest pace since crisis US sales of new collateralised loan obligations, structured vehicles that buy low-rated corporate loans, are poised for their strongest month since the financial crisis as issuers take advantage of falling rates. Amid a wider rally in the credit markets, managers of CLOs have announced or issued some $2.51bn of new issuance in February, according to Standard & Poor's Leveraged Commentary & Data, a research group. Steven Miller, the group's managing director, said on Wednesday that this month's CLO issuance tally would beat the $2.5bn recorded in November 2011. "The recent mini-surge in CLO volume is part and parcel of the broader positive bias in the credit markets that has driven funding costs lower," he said. Observers have been optimistic about an increase in CLO activity in the US this year because the corporate loans that are the collateral for these vehicles did not suffer the historically outsized losses that hit other securitised products such as home loans, even if prices for corporate loans declined sharply during the financial crisis. Another bright spot this year for the securitisation industry, which is still smarting from the collapse of certain sectors during the financial crisis, has been car-related securitisations. Issuance of securities backed by car loans, leases and dealer inventory has been more than $12bn, the largest year-to-date volume in seven years, Dealogic, the data tracker, reported last week. New CLOs so far this year total about $3.7bn, S&P LCD data showed, compared with $4.4bn in the fourth quarter of 2011, which was the most since 2007. CLO creation remains well below its peak during the last decade. In 2006, $96bn in new CLOs were created for an average monthly tally of $8.1bn. At that time, issuance rose sharply as leverage abounded, fuelling the buy-out boom of 2006 and 2007. CLOs buy loans to highly indebted companies that often fund mergers, acquisitions and private equity buy-outs. "If the volume of loan issuance picks up, we will have a significant increase in CLO volume in the next few months," Mr Miller said. What is keeping [CLO issuance] below its potential is not having enough collateral for CLOs to put their money in. While M&A and other deal activity remains low, issuance of US non-investment grade loans that are syndicated to institutional investors is $29bn year-to-date versus $66bn in the same period a year ago. Market participants have warned that proposed regulations for banks could significantly restrain future CLO issuance.