As we leap into yet another promising year, hopefully, I extend my heartiest wishes to my fellow CLO equity and debt investors, as well as our esteemed partners in the fabulous world of CLOs. May this year bring a continuous upswing in CLO equity NAV, empowering us to navigate with more flair and present opportunities to redeem some of our ‘vintage’ deals.
In anticipation of a market that’s as dynamic as a New Year’s Eve party, we eagerly hope for a scenario where CLO liability spreads tighten faster than my New Year’s resolutions fade, thus creating a more robust and profitable landscape for us all. Of course, we need the corresponding asset spread tightening to be restrained, so as not to spoil the party.
In keeping with our spirit of unyielding optimism (and a bit of wishful thinking), let’s also set our sights on a year where rating agencies adopt more lenient methodologies. Such a change would be as welcome as a tax break, potentially easing our cost of funding and extending those precious reinvestment periods. After all, the CLO structure has been about as unshakeable as the Italian devotion to espresso, weathering credit cycle after credit cycle.
Let’s remember, as CLO equity investors, we’re the unsung heroes who shoulder all the upfront costs, fees, and expenses. Without us, CLOs might just be as mythical as unicorns, and many companies would miss out on a pot of funding gold at the end of the rainbow.
Here’s to wishing everyone a year of success and prosperity that surpasses even the most optimistic forecasts!
Happy New Year 2024!
Yours sincerely,
Your Favourite CLO Equity Investor (who may or may not be consulting Merlin’s crystal ball for extraordinary market insights in 2024)
