Active management, structural protections and refinancing have aided the resilience of collateralised loan obligations amid a challenging period for structured finance. The increasing embrace of environmental, social and governance factors in CLOs could aid the market’s recovery and future growth, says Ocorian’s Nick Bland, Head of UK Client Services, and Kareem Robinson, Client Director.*
While there are concerns a Covid-induced corporate distress cycle may feed through into the CLO market, we see very few signs of rising levels of distress so far.
In fact, loan default rates, as defined in CLO documentation, are at this time trending lower than the broader market. In the main, this is due to these vehicles being actively managed and offering structural protections which allow managers to proactively assess the indicators of distress levels and react to them accordingly.
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.