CLO managers snapping up discounted high-yield bonds

Holdings in European CLOs top 8% as managers push to increase caps on fixed-rate assets

discount bargain signs

Managers of collateralised loan obligations (CLOs) are buying fixed-rate bonds at knock-down prices as rising rates have caused prices to diverge from those of loans.

CLOs usually buy floating-rate broadly syndicated loans. This year, though, managers have made use of rules in CLO structures that allow them also to buy a limited number of bonds.

Ordinarily bonds and loans would trade at a similar price. “Fast-forward to earlier this year, and that’s when things got interesting,” says Steve

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