How CLO managers muscled in on the LBO market

Love them or loathe them, institutional investors are now an increasingly important fact of life for LBO financial sponsors. CLOs now account for more than 30% of the market in Europe and are starting to venture into every part of the LBO structure. But if things go wrong, there is now a fund manager across the workout table, not a friendly banker. Louise Bowman reports.

How to judge manager performance

CDS on leveraged loans

clo-main.gif

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.

Access intelligence that drives action

To unlock this research, enter your email to log in or enquire about access