A collateralized loan obligation, or CLO, is a special purpose vehicle that invests in a pool of broadly syndicated or middle market senior secured loans covering a diverse range of issuers and industries. The portfolio of loans is selected by a collateral or CLO manager, who actively buys and sells loans based on their overall attractiveness and diversification.
The CLO finances this pool of loans with privately placed rated debt and equity, providing investors with market levels of return. CLO equity returns are driven by the arbitrage or difference between the cost of debt and the yield generated by the pool of loans in the portfolio, net of any gains or losses on the investment loan portfolio.
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.