Collateralized Loan Obligations (CLOs) are frequently confused by all but the most sophisticated investors with Collateralised Debt Obligations (CDOs), which were seen by many as the cause of the Global Financial Crisis (GFC). As market confidence took a nose-dive last year during the COVID pandemic, many observers feared that complex-sounding products, with complex or opaque-sounding names, would be the first dominos to fall in a repeat of the systemic problems of 2008.
CLOs have proven to be resilient: leveraged loan secondary markets recovered quickly from the turmoil in March 2020, led by a rally in higher quality credits before extending to lower-rated and COVID battered sectors beginning in 4Q20. Below are loan price movement for some sectors hit hardest by COVID, including Retail, Leisure, Oil & Gas, and Transportation, as well as for loans rated below B3/B-.
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.