This chapter explores the complexities of Collateralized Loan Obligation (CLO) investing, discussing topics like interest rate impacts, loan structures, and competitive landscape among CLO managers. It emphasizes the importance of active management, leverage, and qualitative analysis in making informed investment decisions in the CLO market. The conversation delves into the processes of acquiring CLO securities, analyzing metrics, and implementing investment strategies for potentially higher returns with lower risk.
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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