CLO
Fixed IncomeDefinition
Collateralized Loan Obligation. A securitization of leveraged loans (typically corporate loans rated below investment grade). Tranches range from AAA (extremely thick first-loss protection) to equity tranche (first to absorb losses).
$1T+ market as of 2024. Major buyers of leveraged loans, supporting LBO financing. Performed dramatically better than CDOs in 2008-2009 and again in 2020 — the structure is more conservative and the underlying collateral (senior secured loans) recovers more in default.
$1T+ market as of 2024. Major buyers of leveraged loans, supporting LBO financing. Performed dramatically better than CDOs in 2008-2009 and again in 2020 — the structure is more conservative and the underlying collateral (senior secured loans) recovers more in default.
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