Reported 5 months ago
According to Bloomberg, returns on the riskiest tranche of collateralized loan obligations (CLOs) have surged to approximately 20% annually in Europe and the US due to improved loan performance, tighter debt spreads, and increased payouts. Managers are taking advantage of lower funding costs by issuing more lower-rated bonds, including deferred class F tranches, boosting equity returns. While these returns are currently strong, they may be impacted if global central banks cut interest rates or if financial distress increases.
Source: YAHOO