Securitisation: An Introduction to Collateralised Loan Obligations (CLOs)
A CLO is a securitised product that gives investors exposure to a diversified pool of senior secured corporate loans. As with most securitised products, as we have previously seen, CLOs allow investors to vary their risk-return profiles depending on the tranche they would like to get exposure on.
A single CLO can be thought of two different products, depending on whether you are looking at the debt or equity tranche. Note, however, that there are multiple debt…