The European collateralized loan obligation (CLO) market has held firm throughout this difficult economic climate. Panellists at Opal Group’s European CLO Summit 2023 remained optimistic that there could be 12 more deals before the year’s end.
One point of discussion was the default risk in the market and there was a clear consensus around the 4 to 5% mark. But what’s more ambiguous is the looming downgrade risk, especially its potential impact on the CCC-rated securities. With technical defaults making their presence felt through distressed funds, and with AAA securities facing documentation risks, investors tread a fine line.
Market Analysis
At the forefront of discussions was the increasing attractiveness of the U.S. middle market. The AAA segments now look more appealing at 240 basis points compared to the 160 basis points the broadly syndicated loan (BSL) market is offering.
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.
