This chapter follows Shiloh Bates' journey from an investment banking analyst to the buy side in structured credit, focusing on the evolution of the CELO world from a niche market to a trillion-dollar industry. It explores the appeal of CELO equity tranches, the benefits of investing in floating rate securities within CELOs, and the progression towards investing in riskier CELO equity. Additionally, it delves into the genesis of a book on CELO investing, investment opportunities in CELOs, and the structure, profitability, and historical performance of these assets.
Shiloh Bates is the Chief Investment Officer at Flat Rock Global, an alternative credit manager specializing in the junior tranches of CLOs. Last year, Shiloh published CLO Investing, a comprehensive review of the structure, payoff rules, and historical performance of CLOs. Our conversation covers Shiloh's twenty-five years spent in and around the space, an overview of the market, the characteristics of CLOs, the attractiveness of CLO equity relative to other credit opportunities, and Flat Rock’s approach to investing in CLO equity and BBs.
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