Bankers Get Creative to Offload CLO Risk in U.S. and Europe
- Shorter-dated and static structures emerge to boost appeal
- Managers look to length of call periods to time credit cycle
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Arrangers of collateralized loan obligations are innovating their way through a tough market as they try to shift a stockpile of warehoused assets from their balance sheets.
The year’s first batch of new CLO issues to price in the U.S. includes two transactions with short maturities and one static deal, where the underlying pool of loans remains the same throughout its lifetime. These non-typical features are offered to draw in investors some of who have grown more cautious after leveraged-loan prices dropped and CLO funding costs rose at the end of last year.