US CLOs & Leveraged Loans Conference
The Road Traveled | The Road Ahead
We are excited to welcome you back to our 7 WTC headquarters for a timely, in-person conversation on the credit performance of leveraged lending and CLO credits in the recent past, the months ahead, and into next year.
Registration is required to attend the workshop
Multiple Headwinds to Challenge Low-Rated Corporate Issuers
While corporate issuers are well-positioned to handle a modest downturn and rising rates, protracted economic weakness will likely lead to increasing downgrades and defaults as well as to higher firmwide LGDs. Cyclical and confidence-sensitive sectors are showing greater vulnerability and private equity-backed issuers dominate the loan market and lower rungs of spec grade. Covenant flexibility will facilitate their shareholder-oriented financial engineering.
- While current conditions reflect sufficient intrinsic liquidity, how will the deteriorating economic and credit environment impact already weak rating quality?
- How will the myriad weaknesses we’ve observed in our review of credit agreement term sheets manifest in a downturn?
- What is the outlook for the LGDs of senior secured leverage loans given the predominance of bank debt and modest levels of structurally subordinated debt on most loan issuers’ balance sheets?
Lessons from the Past for the Future – How Will CLOs Weather the Next Challenge?
CLOs have demonstrated strong performance in past economic cycles thanks in part to structural protections and manager experiences. But, while recovering swiftly from the 2020 pandemic downturn, CLOs amassed even greater portions of B3-rated debt than their pre-pandemic levels. With a potential looming downturn, CLOs will be tested again in their ability to navigate the challenges of higher interest rates, inflation, and corporate credit deterioration, as well as to seize opportunities
- How will the next downturn be different for CLOs in terms of risk from credit deterioration in their portfolios as well as opportunities from participating in distressed assets?
- To what degree will potential leveraged loan credit deterioration affect CLO tranche performance and put constraints on managers?
- What new tools and strategies do managers intend to employ when faced with potentially worsening CLO collateral quality and new challenges?
- Will the various CLO structures, such as static and managed broadly syndicated CLOs, CBOs, and middle market CLOs, perform differently and what are their respective advantages?
An error occurred trying to play the stream. Please reload the page and try again.Close