How does a collateralized loan obligation work?

There are four stages of the CLO lifecycle, which generally occur over eight to 10 years:

  1. Warehousing
  2. Issuance
  3. Expansion
  4. Repayment

Warehousing

First, the owners of the collateralized loan obligation (CLO) create a structured investment vehicle. It’s basically like establishing a company in the business of buying loans. But, to purchase those loans, they first need to raise some capital.

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.

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