CDOs/CLOs

The class A notes, secured by legacy trust-preferreds and subordinated debt of institutions, carry an investment-grade A1 rating from Moody's. That rating is slightly lower than a prior Hildene CDO, due to elevated pandemic risk to bank profitability.

King Street's new CLO is the first European deal rated by Moody’s to fail to meet all the portfolio requirements at this milestone.

Money managers including Owl Rock Partners, Pretium and PGIM are racing to add workers with restructuring and bankruptcy experience as they take in record amounts of cash to buy cheap assets battered by the economic fallout of the coronavirus pandemic.

An article in The Atlantic warning that collateralized loan obligations will be banks’ next downfall overestimates the risk of these securities.

Restricted from taking on distressed debt or debtor-in-possession loans, CLO managers are being left out of opportunities in coronavirus-related debt restructurings. "It's frustrating," says one manager. "We are supposed to be the bully, not the one being pushed around.”

Longstanding CLO manager Western Asset Management just priced its first deal of 2020, and despite the transaction's much more conservative structure, spreads doubled from its deal a year earlier.

The breakdown, described by people with knowledge of the relationship, is among the many scuffles emerging on Wall Street as the coronavirus pandemic pits distressed companies and their owners against lenders.

Four transactions from three managers, Alcentra, Barings and Bardin Hill, showed a breach of one or more of their so-called over-collateralization tests based on May filings.

Bain joins firms like Blackstone Group Inc., Oaktree Capital Group LLC and Carlyle Group Inc. in looking to capitalize on potential opportunities created by the coronavirus pandemic that has hammered businesses.

Leveraged loans and collateralized loan obligations do not represent an "existential" threat to the global economy or to the U.S. banking system, as some recent highly charged reports have suggested.