High demand for euro CLO collateral fuels US loan recycling

By Tom Brown
12 Dec 2019

The amount of exposure to US loan collateral in European CLOs has climbed to as high as 30% for some newly issued deals, as newer managers “recycle” US collateral into euro transactions.

US collateral in European deals – either denominated in euros or dollars -- are included to add diversity to a CLO, in addition to potentially offering better relative value than European leveraged loans. But by increasing the amount of US collateral in European CLOs, managers typically will be ...

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