The CLO Collateral Manager Debate on the Lower CSA

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There's loads of stakeholders in this debate, like you say, across borrowers, sponsors, loan investors and in CLO structures. And clearly the incentives are not aligned. We weren't looking for a windfall. We just wanted to keep a level playing field. Right? So I think that that's very much closed because people have realized that CLOs, which are 60% of the loan market, if CLOs are focused on it, then you'll need them to kind of not object"

The end of Libor is a little over a week away, and some US corporate borrowers are still racing to switch their floating rate loans to SOFR ahead of the 30 June deadline.

The loan market’s transition away from the old reference rate has been slow, but increasingly contentious in recent months. Borrowers, lenders and financial sponsors have tussled over the compensation offered to loan investors to swap into the lower-yielding SOFR benchmark.

In this week’s edition of Cloud 9fin, US deputy editor David Bell sat down with Dan Ko, a senior principal and portfolio manager at Eagle Point Credit Management to talk about how CLO equity investors rallied loan buyers to resist off-market SOFR amendments — as well as the challenges and opportunities in CLO equity as more deals exit their reinvestment periods.