CLO Payouts On Track for Best Year Since 2016: Structured Weekly
- The distributions are set to be around 15%, edging out 2021
- Many CLOs issued this year bought loans at lower cost in 2023
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More income is flowing through to investors in the riskiest portions of collateralized loan obligations, signaling a relatively strong year for the equity pieces of the roughly $1 trillion US market.
That’s in part because issuers of CLOs pounced on relatively low loan prices last year and early this year to print new vehicles at a rapid pace, helping lock in attractive income differentials, according to a note by Deutsche Bank AG. New CLO creation has since slowed down, overtaken by a frenzy of reset and refinancing transactions, but the benefits of the loans sourced earlier at relatively cheap levels are still flowing through.