Brian Chappatta, Columnist

CLOs Are Not CDOs, Not Even During a Pandemic

The structured products have their problems but are hardly about to topple the banking system.

June 16, 2020 at 10:00 AM UTC

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

These are not CDOs.
Photographer: Ron Antonelli/Bloomberg

Provide news feedback or report an error

Site feedback:

Take our Survey

This article is for subscribers only.

The collateralized loan obligation bogeyman is back.

This time it comes in the form of a widely read article in The Atlantic, “The Looming Bank Collapse,” written by Frank Partnoy, a law professor who helped structure and sell CLOs and collateralized debt obligations at Morgan Stanley in the 1990s. CDOs, of course, were one of the key culprits behind the 2008 financial crisis. So, with the boom in CLOs during the last expansion, “we could be on the precipice of another crash, one different from 2008 less in kind than in degree,” Partnoy wrote. “This one could be worse.”