Collateralized loan obligation managers and arrangers have long argued that they should not be subject to the requirements to retain “skin in the game” of these deals. CLOs, which are backed by below investment grade corporate loans, didn’t contribute to the financial crisis, the argument goes, and they shouldn’t have to pay the price for it.

Regulators have granted CLOs an exception, but it’s unlikely to reduce the burden on managers, likely forcing many of them to raise capital, sell themselves to a larger manager, or call deals early.

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