Definition and Purpose
A Collateralized Loan Obligation (CLO) is a type of financial security that is backed by a pool of loans, typically corporate loans or commercial real estate loans. The purpose of a CLO is to securitize these loans, which means to bundle them together and sell them as securities to investors. The cash flow generated by the loans is used to pay interest and principal to the investors who hold the securities.
- Collateralized loan obligations (CLOs) are financial instruments used to securitize a pool of commercial loans.
- CLOs are structured in a way that allows investors to earn a return on their investment through the interest payments made by the borrowers.
- The loans that make up the CLO are divided into tranches, with each tranche having a different level of risk and return.
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.