Capital Allocators – Inside the Institutional Investment Industry Shiloh Bates – CLO Investing at Flat Rock Global (EP.379)
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Apr 11, 2024 Shiloh Bates, Chief Investment Officer at Flat Rock Global and author of "CLO Investing," shares insights from his 25-year career in collateralized loan obligations (CLOs). He discusses the significant evolution of CLOs into a trillion-dollar industry and highlights the importance of loan selection and risk management. Shiloh also examines investment strategies for CLO equity, the advantages of interval funds over traditional credit vehicles, and the importance of education in the sector, rounding out the conversation with personal reflections on life beyond finance.
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Career Start
- Shiloh Bates's career began in investment banking at Wells Fargo after graduating from Harvard.
- He transitioned to the buy-side in 1998, working for a CLO manager he'd previously helped finance.
CLO Market Growth
- In 1998, the CLO market was a niche sector with only $6 billion in AUM and six managers.
- Today, it has grown significantly to over $1 trillion AUM and about 100 active managers.
CLO Growth Drivers
- CLO market growth is driven by investor interest in first lien loans with high yields and low duration.
- CLO securities have historically performed well, particularly CLO equity during the financial crisis.
