Yield hunters reawaken CLO chimera

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By Paola Aurisicchio
15 Oct 2020

The quest for yield has reawakened the market for an unusual form of CLO that pools both leveraged loans and high yield bonds to form a hybrid product. The structure has reappeared despite volatility in credit markets caused by the coronavirus crisis, with issuance escalating recently and set to rise as more CLO managers try to take advantage of opportunities — not just in loans but also the $1.2tr high yield bond market, writes Paola Aurisicchio.

The hybrid bond-loan CLO structure resurfaced earlier in the year from specialised managers, such as Anchorage Capital Group and Romark Credit Advisors, the manager affiliated with Shenkman Capital Management.

Then, last month, issuance went up a notch with two deals from Diameter Capital Partners, one of which was ...

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