Risk retention breeds ‘ghost’ structures for new CLOs

By Will Caiger-Smith
29 Jan 2015

Apollo Global Management, Carlyle Group and Credit Suisse Asset Management are among CLO managers that have structured new deals with ‘ghost’ tranches that could be used to refinance the transaction after risk retention rules come into effect, without having to take down the 5% equity stake those rules require — if regulators deem it acceptable.

It is unclear how the risk retention rules will treat refinancings, but many industry participants contacted by GlobalCapital believe that when deals issued before the rules come into effect are eventually refinanced, the notes produced in the refinancing will have to comply with the rules.

Apollo’s latest CLO, ...

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