Forward Guidance Structured Credit Maven Laila Kollmorgen on CLO’s Rally and Opportunity To Differentiate As Fundamentals Soften and Prices Climb | VanEck Fireside Chat #6
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Sep 11, 2024 
Laila Kollmorgen, a Portfolio Manager specializing in CLO Tranche at Pinebridge Investments, shares insights on the booming market for collateralized loan obligations (CLOs). She discusses their appealing structure and how they outperformed during recent market turmoil. The conversation delves into the selective investment opportunities arising as credit fundamentals soften and prices rise. Laila also compares CLOs to CDOs, emphasizing their resilience in the face of past financial crises and the critical factors in making informed investment decisions.
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CLOs Explained
- CLOs (Collateralized Loan Obligations) are securitized bundles of corporate loans designed to free up bank balance sheets.
- They offer attractive returns for institutional investors and have historically low default rates with good recovery value.
CLOs vs. CDOs
- CDOs (Collateralized Debt Obligations) packaged subprime mortgages, leading to systemic collapse during the 2008 financial crisis.
- CLOs performed better due to higher underlying collateral quality and stricter origination/syndication processes.
CLO Outperformance
- CLOs have outperformed most fixed income assets in recent years due to their floating rate nature and lower duration risk.
- This contrasts with losses experienced by investors in long-duration assets like agency mortgage-backed securities and treasuries.