CLO managers are finding creative ways to restructure their portfolios. Following Morgan Stanley’s announcement last week that it would repackage downgraded CDO tranches backed by leveraged loans into new triple-A-rated securities—the first strategy of its kind — Egret Capital has also come up with a new restructuring tactic.

Egret earlier this week said it had bought back some of the debt in one of its portfolios, also a first for a CLO manager, according to Moody’s Investors Service. The London-based CLO manager and unit of Societe Generale said it used the interest proceeds from its Egret Funding CLO I Plc portfolio, which should have been paid to class M subordinate note holders, to retire €1.4 million ($1.98 million) of its class E deferrable floating-rate notes at 25% of the principal, Moody’s said. The purchased class E notes will be cancelled.

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