During the Creditflux CLO Symposium in London, Shiloh Bates joined a fireside chat with Tom Davidson, Managing Editor of Creditflux. They discussed current opportunities in the CLO market, among other topics.
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AUM refers to assets under management.
The secured overnight financing rate software (SOFR) is a broad measure of the cost of borrowing cash overnight, collateralized by Treasury securities.
The London Interbank offer rate (LIBOR) was a broad measure of the cost of borrowing cash overnight for banks on an unsecured basis, leveraged loans or corporate loans to companies that are not rated investment grade.
Broadly syndicated loans are underwritten by banks, rated by nationally recognized statistical ratings organizations and often traded by market participants.
Middle market loans are usually underwritten by
several lenders with the intention of holding the investment through its
maturity.
A collateralized obligation (CLO) is a structured finance
product that is backed by a pool of assets other than leveraged loans.
Global financial crisis or GFC refers to the banking downturn in 2008 and 2009.
Risk retention is when the CLO manager acquires securities in its CLO to meet regulatory requirements.
Junior capital is financing that has a lower priority
claim in debt repayment to a secured term loan spread is the percentage difference in current yields of various classes of fixed income securities versus treasury bonds. Or another benchmark bond measure yield is income returned on investments such as the interest received from holding a security. The yield is usually expressed as an annual percentage rate based on the investments cost.
Current market value or face value amortization is the process by which the CLO repays its financing after the reinvestment period ends. CLO equity missing payments happens when there are too many triple C rated loans or defaulted loans in the CLO disclosures for the Flat Rock Global CLO equity index can be found on the Flat Rock Global website.
Liability management exercises or LME are an out of court restructuring of a company’s debt in which the lenders take a haircut on the principal balance of their loans. General disclaimer section, references to interest rate moves are based on Bloomberg data. The credit quality of fixed income securities and a portfolio is assigned by a nationally recognized statistical rating organization, such as Standard and Poor’s, Moody’s or Fitch as an indication of an issuer’s credit worthiness ratings range from triple A (highest) to D (lowest) bonds rated Triple B or above are considered investment grade credit ratings. Double B and below are lower rated securities, also known as junk bonds.
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