In this Pensions & Investments Q&A, Adrienne Butler breaks down the qualities that make CLOs a solid investment amid shifting market dynamics and the potential for further rate cuts.
P&I: Is it ‘prime time’ for CLOs today?
“It definitely is prime time for CLOs,” said Adrienne Butler, head of global CLOs at Barings. “We have seen stars align across the industry, both on the issuance side and on the investing side, which makes it a potentially beneficial time to be invested in CLOs.” The firm has seen strong demand for floating-rate products up and down the capital stack, from triple-A rated to equity tranches, she said.
The macro environment, with uncertainty around economic growth and interest rates, is supportive. “Having a diverse pool of assets in a time like this is really important because you don’t have complete visibility on where rates are going to go or on any kind of exogenous shocks or geopolitical events,” Butler said. “Having a highly diverse pool that you can invest in provides you a degree of confidence in what might be a more volatile market.”
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