When the leveraged loan market starts to see defaults you better.
It seems easy to get caught up in the leveraged finance bonanza of late, and CLO managers have done just that. According to figures reported by Derivative Fitch, cash CLOs made up 69% of total European cash CDO issuance in 2006. This phenomenal growth is expected to continue into 2007. But as the market grows to accommodate a larger investor base, market analysts warn that the signs for an impending downturn are already there and managers should be taking steps to make sure their investments are safeguarded today from the defaults of tomorrow.