Hedge Fund Manager Trips Up as Asset Downgrades Hit CLO
- King Street fails effective date obligation for second CLO
- First instance of this for a Moody’s rated European deal
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Hedge fund King Street Capital Management has fallen foul of the slew of asset downgrades hitting CLO portfolios amid the coronavirus outbreak.
The firm, which issues CLOs through its Rockwood Capital portfolio manager division, failed a portfolio test on its second European CLO at a key date in the transaction’s cycle, known as the effective date. In doing so, it is the first European CLO rated by Moody’s Investors Service to fail to meet all the portfolio requirements at this milestone.