What CLO investors really need to know
From the drivers of CLO performance to cashflow modelling, these are the seven things every CLO equity investor needs to know. This article is an extract from Dealscribe and CLO Research’s guide What CLO Equity Investors Need To Know

CLO Census: It’s time to put the shop in order
After a lacklustre year for the CLO market, the 539 respondents to our comprehensive survey are increasingly calling for structural changes, from electronic trading to standardised documents

Fund performance
Good month for CLO funds sees six in top 10 as Axiom sets pace

Rope-a-dope brings knock-out returns
Post-pandemic US and European CLOs delivered mid-teen equity returns in 2022, despite a barrage of weak macroeconomic news and what could have been a heavyweight Libor mismatch  

Are we ready for another crisis?
Credit managers must brace themselves for stress in 2023, as rates rise and the number of poor performing assets increases. But most CLOs look well-placed and can rely on plump OC cushions 

Weren’t there more of us than this?
According to this year’s Creditflux CLO Census, the CLO industry is not feeling optimistic. Some investors have vanished and managers have not taken advantage of helpful market conditions

We can cope with downgrades again

Can someone call the triple A? We’ve stalled
CLO issuers are in need of AAA roadside assistance. Despite the emergence of new buyers, a lack of senior CLO investors — particularly US banks — has brought the primary market to a halt  

Still plenty more fish in the triple C

Coronavirus tiers up old ranking script
Forget everything you thought you knew about CLO manager tiers. Apollo and Blackstone are mainstays, but smaller, more nimble issuers are finding new ways to stand out from the crowd

CLOs come up smelling of roses
The coronavirus crisis could have cut back 10 years of CLO market progress, but investors’ foresight, trading chops and flexibility meant many saw their strategies blossom during 2020  

Moving fast pays off for hedge funds
2020 was an up and down year in credit, and credit hedge fund managers had to move quickly to capture opportunities from the dislocations that inevitably opened up

Waiting for afters
Day one arb remains important, but last year there were opportunities aplenty in the secondary market, which put the onus on printing CLOs and waiting for the day after non-call periods expired

We were battered in 2020 — but we weren’t beaten
The CLO industry has survived a year blighted by covid-19. We talk to portfolio managers about the strengths of CLOs and preparations for what was expected to be a ‘cataclysmic’ recession

Trading places: it can pay to bet on the little guy
It’s assumed investors know how good a CLO manager is by the rate at which they trade their way through a crisis. But this time fi ve small, nimble managers are outperforming the market

BRF avoids butcher’s block – for now
While Brazilian meat exporters appear to have survived claims of widespread malpractice throughout the country, the future of the world’s largest poultry producer still hangs in the balance
 

Consumer lending: questions pile up for debt collectors
Cabot’s failed IPO has hit bonds across the debt collection sector – and made investors much more cautious. By Euan Hagger

Which flavour do you favour?
We asked four direct lenders for their opinions on four fictional European borrowers operating in software, food, consumer loans and retail – and found they had similar tastes.

Engineering and construction: diversification leads to deepening debt
In trying to build a more global roster of clients, some construction companies may have dug a hole for themselves

Payday: Investors go for broke on regulatory bet
New regulations could seriously hamper US payday lenders – but bond holders are betting the rules won’t be enacted

Investing ethically is worth it
Managers could see less volatile returns as a result of their increasing adoption of ESG-friendly portfolios; meanwhile direct lending is spreading across Europe

US fashion stores: queueing up to exchange old debt
Fashionably loose covenants are allowing under-pressure retailers to turn expensive unsecured debt into senior notes

Healthcare providers: Heading for the emergency room
Donald Trump’s pledge to scrap the Affordable Care Act has hit a big high yield sector hard

Container shipping: Struggling to stay afloat
Debt and overcapacity mean container shippers must consolidate fast to avoid further wrecks

Finding value near the market’s peak
Central bank buying is driving credit to new highs. Pundits suggest looking at long-dated bonds, options and selective shorts as ways to make money in a world of tight spreads