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ARTICLE · 08 JUNE 2021

CLO Market Demonstrates Resilience And Innovation

Ocorian
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While there are concerns a Covid-induced corporate distress cycle may feed through into the CLO market, we see very few signs of rising levels of distress so far.

GlobalFinance and Banking
Nick Bland
Nick Bland
Kareem Robinson
Kareem Robinson

Active management, structural protections and refinancing have aided the resilience of collateralised loan obligations amid a challenging period for structured finance. The increasing embrace of environmental, social and governance factors in CLOs could aid the market's recovery and future growth, says Ocorian's Nick Bland, Head of UK Client Services, and Kareem Robinson, Client Director.*

*Article first published on Global Capital, May 2021

While there are concerns a Covid-induced corporate distress cycle may feed through into the CLO market, we see very few signs of rising levels of distress so far.

In fact, loan default rates, as defined in CLO documentation, are at this time trending lower than the broader market. In the main, this is due to these vehicles being actively managed and offering structural protections which allow managers to proactively assess the indicators of distress levels and react to them accordingly.

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