Credit quality for collateralized loan obligations (CLO) is weakening on several fronts. An April 5 Moody’s report notes that the core structure of the loan products and their related investor protections are favoring the borrower at a time when the US Federal Reserve and Securities and Exchange Commission haven’t challenged a February court ruling exempting the investment products from specific Dodd-Frank provisions. The recent moves are part of a trend towards lower credit requirements that Moody’s has been warning of for more than a year. The regulators decision not to challenge a circuit court’s ruling that CLO funds that were exempted…
Credit Quality For CLOs Collapsing
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.