CLOI - CLO Strategy Selectively Adds Risk Amid Rally

2024-04-25 08:15:00 ET

Summary

• In March, CLOs rallied across the capital stack for the fifth consecutive month alongside better-than-feared earnings and continued strong demand as all-in yields remain high.
• Despite the lack of change in tight valuations, we have greater conviction in the base case for a stable economic environment ahead.
• Tighter AAA spreads and a stable economic outlook drove a modest shift in our CLO strategy into lower investment grade tranches, but selection is key.

CLOs started the year strong and new issuance is at record pace. Tighter AAA spreads and a stable economic outlook drove a modest shift in our CLO strategy into lower investment grade tranches, but selection is key. ...

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