Performing Credit Quarterly 1Q2023: Flight Risk
The Insight by Oaktree Capital
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The Future of CLLOs
default rates in the loan market may increase more than those in the high-yield bond market over the next year, and recovery rates could be lower. We expect that downgrades and defaults will increase during this period, particularly for borrowers with high leverage or those in cyclical industries. Leverage in the U.S. loan market has grown in the recent decade as loans have become the tool of choice for private equity sponsors financing leveraged buyouts.
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