An Introduction to Collateralized Loan Obligations (CLOs)

The first joint publication between Yield Book and Refinitiv LPC is now available. This paper covers what a Collateralized Loan Obligation (CLO) is, why it’s a compelling structured product, and how it fits into the broader leveraged market.

CLOs have proven to be a resilient and mature product, and have weathered recent severe economic downturns relatively unscathed thanks to its self-curing structure and active management.

While CLOs are not part of major fixed income indexes, the market has grown to be a key and unique securitised product asset class with strong historical performance and market liquidity. In particular, CLO floating rate notes appear to be very well positioned for a rising rate environment.

This paper covers this, along with the key features of a CLO, including the underlying leveraged loan portfolio, deal structural protections, and the role of a CLO manager.

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