In the 2.0 CLO landscape, it is quite uncommon to see very high cash-on-cash equity distributions. However, 42 regular reinvesting US BSL CLO deals have distributed impressive cash payments to their equity investors, with annualized payments of around 25% or more so far this year.
It is not straightforward to compare annual distributions between performing deals as many variables—such as the amortisation of the class...
Net interest margin (NIM) and the leverage of the CLO structure are among the main driving factors that determine the longer-term equity distribution trend. The net interest margin at the outset is an important number that market participants look at to decide if there is enough arbitrage for equity investors in a stable market condition.
The following EU CLO deals issued and priced their single-B tranches this year. These were initially structured for delayed issuance...
Gain invaluable insights from this updated article, which explores the equity internal rates of return (IRRs) of over 500 US CLO deals. It highlights managers who have adeptly handled these deals, demonstrating equity IRRs exceeding the 12.0% threshold.
Despite the EU's lower interest rate environment, we have observed that EU CLO equity tranches in reset deals have exhibited higher median annual distributions than their US counterparts across vintages from 2013 to 2015 and 2017 to 2018.
