US CLO managers are pretty evenly split on how to comply with an impending requirement to keep “skin in the game” of their deals.

A survey of some 50 managers of collateralized loan obligations by Fitch Ratings indicates that just over 40% plan to hold on to the most subordinate trance of their deals, giving them the first-loss position. This is known as the “horizontal” strategy. And nearly 35% plan to hold on to a slice of each tranche of their deals, known as the “vertical” strategy.

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