A recent court decision involving JPMorgan and Mexican cable operator Empresas Cablevision sent another blow to the securitization market, and especially to collateralized loan obligations (CLOs), but gave more of a say to borrowers when lenders want to pass on their loans to others. It could have a broad-reaching impact on structured financings.

At the end of July, the US District Court for the Southern District of New York invalidated a participation granted by JPMorgan to another bank in a loan from JPMorgan to Cablevision. The terms of the loan allowed participations, but the court recharacterized the participation as an assignment-which required the borrower's consent.

Private equity deal-making activity may be making a comeback, but the collateralized loan obligation market, which helped fueled the buyout boom prior to the financial crisis, remains sluggish. That suggests we won't see a new LBO boom anytime soon.

PE-sponsored companies last year accounted for 34 percent of distressed exchanges, or so-called "extend and pretend" refinancing, since the deals extend the maturities of high-yield debt that is in technical default without retiring much if any of it. Since these companies were funded mostly with leveraged loans held in CLOs, the exchanges exposed more than 500 CLOs to 96 companies that defaulted in 2009, according to a recent Moody's Investors Service report. That means the CLO market is in no condition to support a new wave of big debt-fueled deals.

The market for collateralized loan obligations is coming back to life but still seems a long way from being able to help companies refinance loads of high-yield bonds coming to maturity in the next few years.

Citigroup is underwriting a $500 million CLO managed by WCAS Fraser Sullivan Investment Management, the first in 12 months, according to a report by Bloomberg published Tuesday.

Collateralized loan obligations, which are securitized bonds made of loans sold by high-yield companies, had all but disappeared during the credit crisis.

Matt Quinn wondered yesterday what has changed when it comes to banks' philosophies on risk taking as Bloomberg published a headline that read "JPMorgan Poised to Lead CLO Comeback After Record Loan Rally."

I agree that we seem to be returning to the old ways rather quickly. Not long after Mr. Quinn pressed the send button, another bank, Wells Fargo -- which is, by the way, also the latest bank to repay TARP money -- helped arranged a $275 million CLO, the largest sold by a fund in the U.S. since January.

Guggenheim Partners bought most of the CLOs, which was made of middle-market loans issued between 2005 and 2009, according to the Wall Street Journal . NewStar Financial is managing it.

"This represents a significant opening of credit provided by the capital markets," Guggenheim chief investment officer Scott Minerd told the WSJ. "The transaction was structured utilizing updated published rating agency methodologies. The offered notes can withstand significant levels of defaults and provide increased levels of credit enhancement when compared to historical CLOs."

So to sum up, the new CLOs are better because they are less risky and structured according to credit ratings agencies methodologies. I feel like I have heard that already not that long ago.

As far as headlines that make me cringe go, two doozies came over the wires this afternoon. First there was this one from Bloomberg: "JPMorgan Poised to Lead CLO Comeback After Record Loan Rally." And then this from Reuters: "U.S. bank regulators water down securitization plan."

Yes, banks are so emboldened by 1) the resurgence of the market and 2) the lack of real regulatory reform that they are back pushing collateralized loan obligations, which Bloomberg noted "contributed to $1.7 trillion of writedowns and credit losses worldwide."