CLOs, Leveraged Loans Get Partial Lifeline in Fed’s TALF Changes
- TALF accepts CLOs with broader range of holdings as collateral
- Investors say it won’t open deal floodgates as hurdles remain
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The Federal Reserve revised its Term Asset-Backed Securities Loan Facility to allow CLOs that hold a broader range of leveraged loans to be used as collateral.
The Fed will now accept new AAA CLOs with leveraged loans, including refinanced loans, that priced as far back as January 2019, according to a statement Tuesday on the central bank’s website. Previously, eligible collateralized loan obligations could only hold newly-originated loans.