Collateralized loan obligations, commonly termed a CLO, the spawn of collateralized debt obligations that were at the center of the global financial crisis, remains strong after a 2014 peak, a recent Morgan Stanley report notes. While the investment concept has its critics, the investment bank points out the mechanics of how the investment operates. Are collateralized loan obligations “filled to the brim with junky leveraged loans?” A CLO is nothing more than a pool of leveraged loans packaged into a “special purpose vehicle” (SPV) and sold in pieces, known as “tranches,” said the February Morgan Stanley report titled a “A Primer…
Collateralized Loan Obligations Explained
Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.