In this paper, we discuss key features of leveraged loans and CLOs, which are a major financing source to the leveraged loan market. By investing in CLOs, investors get access to a diversified non-investment grade corporate credit portfolio.
While CLOs are not part of major fixed income indexes, the market has grown to be a key and unique securitized product asset class with strong historical performance and market liquidity. In particular, CLO floating rate notes appear to be very well positioned for a rising rate environment.
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