Europe’s corporate loan market is in the midst of a refinancing boom, and this is increasingly compelling the region’s CLO managers to ask their investors for more time to repay principal.

As in the U.S., collateralized loan obligations are among the biggest investors in European leveraged loans. These investment vehicles issue bonds and use proceeds to acquire portfolios of loans. As the loans in these portfolios are refinanced, extending their maturities, the CLOs are running afoul of covenants designed to safeguard bond investors.

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