Grant’s Current Yield Podcast The ABCs of CLOs
5 snips
Apr 3, 2024 Guest John Kerschner from Janus Henderson Investors discusses CLOs, company financials, market trends, historical theories, and the securitization process of CLOs including risks, performance during crises, and management strategies. The podcast also compares Janus Henderson's CLO ETFs, explores the leverage loan market dynamics, and highlights the advantages of investing in CLOs for diversified portfolios.
AI Snips
Chapters
Transcript
Episode notes
CLOs Explained
- CLOs are similar to other securitizations like mortgages or auto loans, but they package corporate debt.
- This allows investors to access a diversified pool of loans without underwriting each borrower individually.
Risk Structuring in CLOs
- Individual loans within a CLO may not be AAA-rated, but the structure concentrates risk.
- This allows for creating higher-rated tranches resembling corporate AAA credit or even treasury securities.
CLO Performance During the Financial Crisis
- During the 2007-2009 financial crisis, CLOs of varying ratings experienced significant price fluctuations.
- Remarkably, by 2013, they had recovered to near par value, demonstrating resilience.