Two loans have defaulted from Sanwa Bank's $2 billion Excelsior collateralized loan obligation, triggering an early amortization event that will result in the deal repaying in less than a year - a first-time occurrence for the CLO market.

According to people familiar with the deal, the early amortization event happened because the amortization triggers on the deal were set too tightly. As such, when the two defaulted loans - totaling just $8.5 million - wiped out the cash collateral account, the busted loans reduced the account to below 50% of its original level, which triggered the deal to repay.

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