Ongoing pressure on the credit ratings of some of the largest financial institutions could result in a minor shakeup in the ranks of CLO trustees.

Nearly all CLOs designate a single bank at closing to serve as the trustee, collateral administrator, and paying agent. This bank’s responsibilities include maintaining a collateral database, reconciling the portfolio with the manager, producing compliance and note valuation reports, and distributing the proceeds on the payment dates to the appropriate parties, in accordance with the waterfall. 

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