CLO Research

Basic Premium

Optimal Conditions for Calling a CLO Deal: A Strategic Overview

Of these 207 US CLO deals, about 63 are better positioned for redemption as they have an equity NAV exceeding 10 percentage points, based on asset prices as of February 5, 2024. Most of these deals originate from the 2017 and 2018 vintages, as indicated in the table below. Market conditions are also conducive for a call. However, the final decision rests with the equity holders.

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Distribution of EU CLO Equity Latest Payments

Please see the chart below for the distribution of the latest EU CLO equity payments across 481 EU CLO deals. The median deal's latest distribution was at 4.2%. At least 10 seasoned deals from the 2013–2017 vintage are well-positioned for redemption. These deals have exited their reinvestment period and have achieved at least 110% of total equity distributions plus NAV on their last reporting dates.

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An Outstanding Recently Redeemed US CLO Equity

Madison Park Funding XLI (formerly Atrium XII) deal was recently called. This deal, managed by CSAM, was closed in late 2015. The deal’s average equity distribution was very impressive, at 19.1% over a period of around 8 years. This deal did a reset in late 2017, reduced its cost of funding significantly, and distributed excess par upon reset. The deal's solid first distribution of 17.2% certainly helped boost the average annual distribution too. Without the par distributions, the deal's annual distribution would likely be around the 17% mark rather than in the 19% area.

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Top-Performing US CLO Managers: Equity Cumulative Distributions and NAV (Updated)

The table below shows the top-performing managers with the most 2013–2019 deals that are in the 90th percentile category. Notably, CSAM stood out as the most successful and consistent manager in delivering good returns to equity investors. Other successful managers include Oak Hill Advisors, KKR Financial Advisors, Goldentree Asset Management, Neuberger Berman, Generate Advisors, Fortress Investment Group, and Anchorage Capital Group.

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