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ARTICLE · 06 DECEMBER 2013

Selected "CLO 2.0" Features

Blank Rome LLP
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As the market for new-issue collateralized loan obligation ("CLO") transactions continues its resurgence, deal documentation in CLO 2.0 transactions continues to evolve.

United StatesFinance and Banking
Grant Buerstetta
Grant Buerstetta
Jaiho Cho
Jaiho Cho

As the market for new-issue collateralized loan obligation ("CLO") transactions continues its resurgence, deal documentation in CLO 2.0 transactions continues to evolve. Managers should be aware of the structural features that have become more common over the last several years in CLO 2.0 transactions.

SUMMARY

  • Senior noteholder input has become more prevalent, particularly in transactions that have an anchor investor in the senior class.
  • Given the increased spread levels on senior notes compared to pre-crisis levels, refinancing and re-pricing mechanisms that allow CLO issuers to adjust the spreads post-closing have become popular.
  • Additional features include limitations on specific activities of the issuer relating to reinvestment and amendment of underlying loans.

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