Tricky CLO amendments could put extra pressure on equity buyers

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By Will Caiger-Smith
15 Apr 2014

CLO managers may be more inclined to amend existing deals to make them comply with the Volcker Rule now that the US Federal Reserve has given bank investors an extra two years to make sure their CLO holdings conform. But that doesn’t make it any easier to do in practice, CLO market participants have told GlobalCapital. And the potential changes could put too much pressure on equity investors.

After the Fed extended the conformance period for existing CLOs, managers will have “greater incentive to amend” documents to make deals Volcker-compliant, said Barclays analysts Jeffrey Meli and Bradley Rogoff in a report published last Friday.

The way to amend non-compliant CLO 2.0 deals would ...

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