A type of refinancing transaction is becoming more popular in the $1.3 trillion market for collateralized loan obligations, a sign the industry is healing as concerns over surging inflation and a potential recession abate.
Known as resets, these transactions can extend the life of CLOs for years. In the past they’ve made up as much as a third of annual issuance, according to data compiled by Bloomberg. But last year’s sharp deterioration in credit conditions all but put the deals on ice.
Now, they’re making a comeback. Credit Suisse Asset Management and Oak Hill Advisors have in recent weeks reset liabilities for CLOs that were originally issued during the second half of 2022. Resetting allows the CLOs to essentially cut the costs at which they borrow. That translates to more money leftover for the holders of the riskiest and highest-returning part of the structure, the equity portion, after other note holders have been paid.
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.
