Leverage lures hedge funds into snapping up triple-A CLOs

By Will Caiger-Smith
08 May 2014

Hedge funds are starting to use aggressive leverage to make an unexpected move into triple-A CLO tranches, writes Will Caiger-Smith. Some players see this buying, which is not yet widespread, as a bid by bank arrangers to boost the product’s investor base, but others report growing real money demand in any case.

“This is an attempt by the banks to grease the wheels,” said one investor. “Arranging banks have not been able to place this stuff as widely as in the past as the market shrinks and there are more of them than before the crisis. So they’re offering out ...

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