Collateralized Loan Obligations: Seeing beyond the complexity

What is a CLO?

Put simply, a CLO is a portfolio of leveraged loans that is securitized and managed as a fund. Each CLO is structured as a series of tranches that are interest-paying bonds, along with a small portion of equity.

CLOs originated in the late 1980s, similar to other types of securitizations, as a way for banks to package leveraged loans together to provide investors with an investment vehicle with varied degrees of risk and return to best suit their investment objectives. The first vintage of modern CLOs – which focused on generating income via cash flows – was issued starting in the mid-to-late 1990s. Commonly known as “CLO 1.0,” this vintage included some high yield bonds, as well as loans, and were the standard CLO structure until the financial crisis struck in 2008.

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.

Click to view all articles for the EPIC:
Or click to view the full company profile:
Share on facebook
Share on twitter
Share on linkedin

More articles like this

Volta Finance

CLOs have proven to be resilient

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

Volta Finance

Bank of America focuses on loan growth

Bank of America Corp shares tumbled on Wednesday after the second-largest U.S. lender detailed its sensitivity to low interest rates and the Federal Reserve indicated it has no plans to raise its benchmark rate any time soon. The

Volta Finance

Structured Debt fund Volta Finance

AXA IM has published the Volta Finance Ltd (LON:VTA) monthly report for June. The full report is attached to this release and will be available on Volta’s website shortly ( PERFORMANCE and PORTFOLIO ACTIVITY Volta continued to perform well

Volta Finance

CLO issuance has been on a record pace to start the year

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

Volta Finance

CLOs draw in new support after showing resilience

One of Wall Street’s hottest hedge funds has pulled in a quarter of a billion dollars from a small group of investors seeking out returns from an obscure corner of capital markets: collateralised loan obligations. Diameter Capital, which

Volta Finance

CLO market demonstrates resilience and innovation

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

Volta Finance

Global CLO market approaches $1 trillion milestone

If you listen to people in the trenches, the collateralized loan obligation market is having a great year. The amount of bonds outstanding is now approaching $1 trillion globally, according to JPMorgan Chase & Co., after defying doomsday