CLOs start 2023 with higher yields and spreads

CLOs and loans significantly outperformed other credit asset classes in 2022, and the asset class enters the new year at materially higher yields and spreads versus one year ago. The VanEck CLO ETFoutperformed the J.P. Morgan CLO Index in the fourth quarter by 0.13%, and since launching in June 2022 has outperformed by 0.57%, driven by both portfolio positioning and security selection. With credit conditions expected to deteriorate this year, the portfolio remains conservatively positioned.

Market Update: CLOs Rally Amid Lower Than Expected Inflation

CLOs continued their fourth quarter rally in December, as easing inflation concerns improved investor sentiment despite the continued hawkish narrative from the Federal Reserve. Inflation was lower than anticipated in November with the narrative shifting during the second half of the month amid hawkish surprises from central banks and weak global economic data, although CLOs held on better than most other risk assets.

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.

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