Investors on the Front Line of CLOs Are Getting Cold Feet
- Equity tranche returns have shrunk to as little as 9%: Aegon
- Flood of issuance has reduced arbitrage for riskiest slice
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Collateralized loan obligations are losing their appeal for first-loss investors who stand to reap the biggest rewards.
Returns on CLO equity are evaporating, and that’s making it harder to find purchasers to take the riskiest -- but potentially most lucrative -- portions of the securitized debt bundles, according to an arranger.