Why conservative CLOs have a short future

Author: Danielle Myles | Published: 27 Oct 2011

Despite their resilience, collateralised loan obligations (CLOs) have been swept up in the conservatism of post-crisis structuring. But perhaps not for long.

Loan pools have been characterised by lower leverage, mangers getting two to three year reinvestment periods and smaller CCC rated asset buckets. A key difference between pre and post-crisis deals is the size of the equity piece taken by the asset...