Concerns about risk retention rules could lead CLO managers to structure new deals with shorter non-call periods, according to analysts at Barclays.

The most recent version of proposed rules requiring sponsors to have “skin in the game” provide for an exemption for collateralized loan obligations. This exemption applies to CLOs that include only “CLO-eligible” loans. But for a loan to be deemed “CLO-eligible,” the lead arranger must retain an unhedged, 5% stake in the deal until maturity.

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