By Tracy Chen, CFA, CAIA
In part one, we provided an in-depth analysis of CLO tranches, including the factors driving their spreads. While each tranche has been influenced by varying forces, we noted the fundamentals for the overall market have deteriorated, particularly relative to high-yield corporate credit. In this blog, we'll complete our coverage of deteriorating CLO fundamentals and market technicals, compare loans to high yield credit, and finally determine whether corporate credit could underperform alongside CLOs.
Overall Declining Quality In The CLO Market
As we noted in part one, overall leverage in the