The credit quality of U.S. middle market collateralized loan obligations (CLOs), major sources of debt funding for mid-sized companies, has worsened only slightly even as the overall risk of late payments by these companies has increased, according to Moody’s.
The new data suggests that despite increasingly challenging liquidity conditions and rising interest rates, demand for mid-sized companies’ debt has persisted, in contrast to fears funding would dry up as the Federal Reserve combats inflation with higher interest rates.
CLOs are pools of leveraged loans, structured as one actively managed security. They have become the biggest source of funding for non-investment grade companies seeking debt financing.
Volta Finance Ltd (LON:VTA) is a closed-ended limited liability company registered in Guernsey. Volta’s investment objectives are to seek to preserve capital across the credit cycle and to provide a stable stream of income to its Shareholders through dividends that it expects to distribute on a quarterly basis.