The Misnomer of CLO Equity

In the past, when you were buying at par, that ability to call or essentially liquidate the portfolio in a few years wasn't as valuable. And similarly, if interest rates were very low and you weren't expected them to go down further, again, not as valuable as the situation we're seeing now. We call CLO equity, equity. However, the legal term is subordinated notes. The underlying portfolio is quote unquote fixed income. That's floating rate.