Riskiest CLO Securities Offer Lowest Payouts in Five Years

Investors in the riskiest slice of bonds backed by corporate loans are now getting their lowest payouts in five years, while some get none at all, according to Deutsche Bank AG.

With borrowing costs near multi-year lows, median equity distributions for the securities, known as collateralized loan obligations, reached an annualized rate of 12.1%, the lowest since 2020, bank strategists Conor O’Toole and Jamie Flannick wrote in a Monday note.