CLO Slowdown Would Be Boon for Leveraged Loans, PineBridge Says
- Japan investors that drove boom now face regulatory pressure
- PineBridge says fewer CLOs would boost loan structure, yields
Pedestrians cross an intersection in Tokyo, Japan.
Photographer: Kiyoshi Ota/BloombergThis article is for subscribers only.
The market for collateralized loan obligations is headed for trouble if the biggest buyers pull back, some observers say. PineBridge Investments begs to differ.
Japanese investors, who helped lead so-called CLOs to record issuance in 2018, now face more regulatory scrutiny at home over billions of dollars in investments in the complex products. PineBridge portfolio managers Steven Oh and Laila Kollmorgen argue that while it would certainly be bad news for those structuring the deals if demand dried up, it would help existing CLOs perform better over time.