CLO market hopes new govt keeps Volcker shift

By Owen Sanderson
02 Dec 2020

Changes to the Volcker rule allowing US CLOs to hold bonds as well as loans ought to survive the shift to a new administration, but market participants will be counting the days and hoping the changes, enacted at the beginning of October, aren’t caught up in a Congressional review.

Since the Volcker rule came in, intended to prohibit banks using their own capital in risky proprietary investments, CLOs have been caught in the crossfire.

The only way for banks to invest in CLO debt, under the rules, was to use a safe harbour that relied on them only ...

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