Collateralized Loan Obligations (CLOs) are securitized pools of leveraged bank loans. The underlying loans are generally made to companies that are below investment grade. Given their low credit quality of the collateral, how do some of the classes receive investment grade ratings? How has the coronavirus impacted the health of these loans? What impact do so-called “cov-lite” terms have on these deals? These questions and others are explored in this virtual training. Pre-sale reports from actual deals are utilized to illustrate how different managers structure CLOs to capture “deal arbs.” The benefits and risks of refinancing entire structures with embedded call features are also assessed.
By the end of the course, participants will be able to:
- Describe the features and characteristics of leveraged loan collateral
- Evaluate the role of CLO managers and the benefits and risks of active management
- Discuss fundamental pricing concepts
- Identify the factors that would create incentives to refinance CLOs in different rate environments
- Fundamentals of the Capital Markets/Securities Industry
- Fixed Income or equivalent knowledge
Program Level: Foundational
Target Audience: Anyone who wants to learn about the collateralized loan markets, such as staff from middle office, operations, IT, compliance, legal, or HR, and regulators who work closely with various aspects of the securitized markets.
Advance Preparation: None
Computers and Financial Calculators: N/A
Recommended CPE Credits: 2.4
Instructor: Rob McDonough
Duration: 2 hours