CLOs And The Securitisation Regulations

Introduction

CLOs play a hugely important role in the European corporate credit market. These products draw in investments from a broad pool of asset managers, pension funds, insurance companies and other institutional investors and apply those investments towards the purchase of corporate loans and bonds, either in the primary market as part of an original syndication, or in the secondary market, by way of trading to purchase such assets from an existing holder.

CLOs make up a significant portion of investments in sub-investment grade corporate debt. As a result, investors in CLOs and funds, as well as their managers, have a large influence on the direction of the European leveraged loan market, at times impacting loan documentation on a market wide basis. The regulation of these products is therefore of great significance to the loan market. Furthermore, the inexorable link between the end investors, fund managers and regulation of such products helps to explain