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"Why can’t loans and CLOs simply move to three-month treasury bills as our reference rate?"
2 years ago
Sofr may be touted as Libor’s natural replacement, but the best known rate in the world is also an option -
"CLO managers who struck the right balance in 2020 are more easily able to reset their deals"
3 years ago
CLO managers were re-evaluated during the pandemic, and outperformers can expect to see benefits this year -
CLO naysayers have made arb and cov-lite into dirty words — that should now change
3 years ago
Recent performance has shown that cov-lite loans and challenging arb don’t spell doom for CLOs -
The tide has turned… the solution for investors is to move into floating rate loans
3 years ago
2020 was the year of fixed-rate bonds, but treasury curves are steepening and demand for loans is heating up -
Perhaps 2021 will be the first year of the next expansion
3 years ago
For 2021, our columnist is focused on Libor transitions, CLO flexibility and loan managers fighting among themselves -
The cost — a few basis points — is modest compared to the potency of bond buckets
3 years ago
If CLOs had bond buckets when Delta Air Lines issued debt, a manager could have bought the bond then rotated into the loan -
CLO collateral managers who are able to update their documents could gain warf advantage
3 years ago
Moody’s is reviewing its approach to warf. Changes could boost managers’ ability to trade -
The length of a CLO’s reinvestment period has no substantive effect on its resilience to defaults
3 years ago
Three-year reinvestment CLOs are the norm, but debt investors should be locking in historically wide spreads for longer -
Around 20% of the US CLO market has traded this year — not bad for an asset class that is seen as illiquid
3 years ago
CLOs can trade cheaply and directly, which helps keep volumes steady even in a crisis -
It takes just a few CLO collateral managers selling into the distressed community to start cracks forming
3 years ago
It is becoming increasingly clear that CLO collateral managers need to improve their collaboration efforts in distressed situations -
Some managers calculated their CLOs were passing OC tests, only to find them failing the next day
3 years ago
Corporate credit downgrade storms have been weathered before, but this one has come out of season -
The CMBS talf proposal is simple and effective. A similar approach for CLOs would be welcomed
3 years ago
It’s great that government is trying to boost securitisations, but they’re missing the mark for CLOs -
The opportunities to build par and spread within a CLO haven’t been this plentiful since 2009
4 years ago
Last year’s CLOs could become the benchmark for manager performance -
Distressed exchanges offer pathways to recapture value that others are trying to take from CLOs
4 years ago
Volcker rule amendments could protect CLOs from losing out to distressed funds in a restructuring -
Don’t be tempted by low debt costs — the key driver of performance in static CLOs is market timing
The development of a term curve in CLO debt does not necessarily make short tenor deals a good bet4 years ago -
Not all old tier one CLO managers lived up to their premier billing
The definition of a tier one manager has evolved from the days when big brands where considered best4 years ago -
Regrettably, a small number of CLO debt investors insist on ‘hardcoded’ Sofr replacement provisions
4 years ago
Sofr looks like the most likely candidate to replace Libor, but it is still risky to write it into CLO documentation -
Typical CLO structures can’t take advantage of dislocation in the high yield bond market – yet
4 years ago
High yield bond buckets in CLO 1.0s allowed managers to build par — it is time CLO 2.0s had the same opportunity -
For enhanced CLOs to outperform, investors need the credit cycle to turn — and quickly
4 years ago
If the current credit cycle doesn’t end within two years, triple C-heavy CLOs will not see a return on their high financing costs -
The IRR of CLO equity is driven by far more than just initial spreads
4 years ago
No one ever says the CLO equity arb looks great. But even in particularly challenging periods there are ways for equity investors to generate strong returns -
Being fully invested can have a greater impact on IRRs than avoiding 2% defaults annually
4 years ago
The IRR differential can be as much as 3.3% for a fully invested CLO versus one that maintains a 5% cash balance -
Continuous par build can provide a rainy-day fund for when downgrades to triple Cs pour in
4 years ago
If CLO managers are preparing for mass downgrades to triple C loans, then trading gains and thick OC cushions are the best defences -
Japanese investors must confirm assets are appropriate... CLO managers can provide assurances
5 years ago
The stipulation that Japanese banks invest in appropriately formed assets is unlikely to hurt the CLO industry -
The extra 250-350bp is excessive compensation for the incremental risks run by long-term CLO investors
5 years ago
Double B-rated CLOs price at a premium over corporate credit and yet default rates are much lower -
Q4 2018, which had loan price volatility without defaults, was close to nirvana for CLO investors
5 years ago
The current vintage of CLOs could be the best ever if the volatility in Q4, when retail funds dumped loans, repeats itself, says our columnist Thomas Majewski
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