The sharp selloff in leveraged loans has created opportunity for some CLO managers, particularly those with deep pockets. Managers that can quickly acquire loans at a discount in the secondary market can still make money bundling them into collateral for bonds.

Until recently, managers of collateralized loan obligations were more likely to rely a “warehouse”  line of credit to slowly acquire loans either at issuance or in second-hand trades. Now that so many loans are trading so far below book value, however, it’s become more attractive to “print and sprint,” or issue CLO notes before acquiring any collateral and use the proceeds to purchase loans quickly and cheaply.

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