summer doldrums: You're often facing weaker investor demand during this time of year, said Jason Merrill, a structured products investment specialist at Penn Mutual Asset Management, of the final days of August when vacations are in full swing, according to Market Watch. But we're also starting to see a more significant problem than summer doldrums. Collateralized loan obligation funds, or CLO funds, are the biggest holders of U.S. leveraged loans and a key source of funding for companies with heavy debt loads, but lately CLOs, which can hold hundreds of loans per fund, have seen liquidity concerns crop up for their riskier bonds. To purchase leveraged loans, CLOs borrow by selling bonds which are then due a portion of the loan pool's repayments. For one thing, investors have been asking for more compensation, or spread, to hold riskier CLO bonds amid the latest salvos of the U.S.-China trade war. While Top Triple A-rated bonds have seen little friction in secondary trading, things have gotten murky lately on lower-rated bonds with higher default risks.
(news.financializer.com). As
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Tagged under summer doldrums, loan pool topics.