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Vibrant Capital Plans to Restructure CLOs to Tap Into Equity Value

  • The firm’s secondary-market strategy will exploit mispricings
  • Plans to ‘collapse’ existing CLOs, create new ones out of them

As investors snatch up collateralized loan obligations en masse in pursuit of floating-rate securities, seasoned money managers are beginning to turn to more sophisticated and creative strategies to drum up value.

New York alternative credit investment management firm Vibrant Capital Partners is planning to pick apart existing CLOs in the secondary market as it hunts for bargains, especially in CLO equity, according to the company. Vibrant says this riskiest but highest-yielding slice of the product is being priced less than what it’s worth when its traded in markets following initial CLO issuance.