Collateralized loan obligations are underpinned not by mortgages but by so-called leveraged loans. These are corporate loans from syndicates of banks that are taken out, for example, by private-equity firms to pay for takeovers.
Proponents of CLOs argue that leveraged loans have a lower record of defaults than subprime mortgages, and that CLOs have less complex structures than CDOs. They also argue that CLOs are better regulated, and carry weightier buffers against default through a more conservative product design.
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.