Corporate borrowers continue to take advantage of strong demand for loans to re-price existing debt, and this is putting a squeeze on some of the biggest buyers of loans—collateralized loan obligations.

CLOs issue bonds, most of which are triple-A rated, and use the proceeds to purchase below investment grade loans.  This only makes sense when the interest rates on the debt CLOs issue are considerably lower than the interest payments they receive on the loans used as collateral.

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