How to judge manager performance
CDS on leveraged loans
LOW VOLATILITY ASSETS and zero defaults. Leverage yourself five to 10 times at historically low rates and make a guaranteed 15% to 20% IRR. It is not hard to pitch the CLO market to prospective asset managers, many of whom seem to see the asset class as the holy grail of the European CDO market.
Barely a month goes by without a raft of debut deals from start-up managers or European CLO transactions issued by large US players. CLOs now gobble up more than 30% of the European LBO market – and together with hedge funds account for 40% to 50% of buyers of leveraged loans. And if their appetite remains unchecked, that percentage will soon be a lot bigger – transforming the fundamental dynamics by which the European LBO market has operated since its inception.
According to Standard...
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