RT Journal Article SR Electronic T1 Collateralized Loan Obligations:
A Structure that Works JF The Journal of Structured Finance FD Institutional Investor Journals SP 89 OP 94 DO 10.3905/jsf.2012.18.2.089 VO 18 IS 2 A1 Justin Pauley A1 Kenneth Kroszner YR 2012 UL https://pm-research.com/content/18/2/89.abstract AB The financial crisis was a gloomy time in the structured product markets, with asset prices dropping, ratings downgrades, and huge spikes in volatility. As investors remained wary, collateralized loan obligations (CLOs) performed as they were supposed to structurally, by paying down the senior noteholders with interest proceeds. Eventually, when the markets regained confidence, secondary CLO prices rose and new issuance began to slowly make a comeback. As a leveraged view on corporate credit, CLOs have and will continue to benefit from a fundamentally strong corporate market. In addition, the low-interest-rate environment and higher loan spreads have boosted many performance metrics to better than pre-crisis levels. We expect the asset class to continue to thrive because CLOs offer attractive yields relative to other structured products and have structural benefits when compared with outright corporate credit. CLOs are a resilient asset class with structures that work.TOPICS: CLOs, CDOs, and other structured credit, asset-backed securities (ABS)