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Wall Street Rushes to Aid CLO Market as New Rules Cloud Outlook

  • JPMorgan, Citigroup and BofA explore arranging new financing
  • Funding would allow managers to put up less of their own cash
Updated on

Wall Street is moving to prop up the $881 billion market for leveraged loans by helping the largest buyers of the debt tackle tougher regulations.

JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp. are among banks exploring ways to arrange a type of financing for managers of collateralized loan obligations that would help them comply with the rules, according to people with knowledge of the matter. The funding would allow managers to put in less of their own capital to conform with so-called risk retention rules that require them to keep some skin in the game to avoid excessive risk-taking.