Goldman Sachs Group Inc. and JPMorgan Chase & Co. are ditching safeguards on the credit lines they extend to managers of collateralized loan obligations, as they seek to defend their market share in the lucrative business of arranging CLO deals.
The Wall Street behemoths are among the biggest providers of financing facilities known as warehouses, which managers in the $780 billion U.S. CLO market use to buy risky corporate loans before they slice and repackage them into bonds. The pair are increasingly providing credit lines without protections that allow them to demand more cash should the value of the debt plunge before it’s sold to investors, according to people with knowledge of the matter.
CLO issuance has been on a record pace to start the year, and is one of the biggest driving forces behind a resurgence in speculative lending that’s fueling a boom in highly leveraged acquisitions by private equity firms this year.
Volta Finance Limited (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.
