CLOI News and Press, VanEck CLO ETF From 01/02/23

Summary The Fed’s interest rate and liquidity tools are blunt instruments, particularly in a service-oriented economy. If inflation indeed moderates from here, it is likely that interest rate volatility moderates alongside it. Monetary policy has created the asset-on/asset-of...

Summary Financing conditions are expected to remain tight and volatile in much of 2023. CLO managers delivered a solid performance in 2022 despite treacherous market conditions. The compressed equity profit margin will continue to challenge CLO managers, which could result in more C...

Summary CLOI is an exchange traded fund focused on CLO debt. The fund is composed of AAA / AA and A tranches, with an overweight positioning in AA tranches. The underlying collateral pool is floating rate, meaning that distributions have increased as rates have risen. Based on h...

Summary While downgrades of loans to CCC could accelerate, we believe high-quality CLOs are well-positioned to absorb the additional CCC exposure. Regarding opportunities in CLO debt, while CLO BBs have outperformed high yield year-to-date on a total return basis, this has been dr...

Summary In the current environment, CLOs may provide an attractive return opportunity among credit assets, with demand remaining robust. CLOs have outperformed most fixed income asset classes year to date, thanks to their floating nature and the increasing level of income generate...

Summary The first stage of a rate cycle takes place when Treasury yields are at or near cycle lows, the Federal Reserve’s (Fed’s) policy stance is maximum dovishness, and profit and economic growth is at or near a trough. In the second stage, the market becomes conce...

Summary Rising rates have driven volatility in the leveraged loan market. We believe CLOs offer attractive access to loans in this environment, given their structural risk mitigation. Despite recent concerns about leveraged loans, we also believe there are several mitigating facto...

Summary The AAA tranche of a CLO typically comprises more than 60% of a CLO and therefore makes up the largest segment of the CLO market. Constructing a CLO portfolio that spans this ratings spectrum allows an investor to benefit from the higher yields that exist within each ratin...

During the reinvestment period, experienced managers with a strong credit selection skillset and a sound risk framework can add significant value by taking advantage of market volatility. So, how should we view CLO managers when the markets are under pressure? What are the factors to ...

CLOs are structured to help mitigate risk, through the strength of their underlying collateral as well as built-in traits such as coverage tests to correct collateral deterioration. Through both the Global Financial Crisis and COVID-19 drawdown, the asset class ultimately experienced ...