clo winners / losers

Based on the most helpful WSO content, here are some insights regarding CLO (Collateralized Loan Obligation) managers:

Winners (Best CLOs to Work At):

1. Bigger Shops with Strong Balance Sheets:

   • Larger firms with robust balance sheets are generally better positioned to navigate the challenges posed by recent CLO regulations. These firms can offer more stability and resources.
   • They also tend to benefit from the increasing popularity of bank debt in LBOs due to cheaper capital costs and the rarity of covenants.

2. Firms with Diverse Opportunities:

   • Some CLO managers allow analysts to work across various areas, such as CLOs, SMAs, retail funds, and credit hedge funds. This diversity can provide a more enriching experience.

3. Work-Life Balance:

   • Certain CLO roles are noted for their better work-life balance compared to traditional IB or PE roles, with typical hours ranging from 45-50 per week.

4. Compensation:

   • While compensation may not always match IB/PE/HF levels, it is still considered attractive and competitive, especially at larger, well-established firms.

Losers (CLOs to Avoid):

1. Smaller Firms Without Strong Balance Sheets:

   • Smaller firms may struggle under the weight of recent CLO regulations, making them less attractive for long-term career prospects.

2. Limited Exit Opportunities:

   • Some CLO roles are noted for having limited exit opportunities, which could be a drawback for those looking to transition to other areas like credit hedge funds or private equity.

3. High-Rated Issuers with Low Yields:

   • Working on deals involving high-rated issuers offering low spreads (e.g., L+175-250) can be less engaging and less rewarding.

4. Firms with Poor Compensation Transparency:

   • Lack of available data on compensation at certain firms can be a red flag, as it may indicate less competitive pay structures.

If you're considering a role in the CLO space, prioritize firms with strong reputations, diverse deal exposure, and a track record of navigating regulatory challenges effectively.

Sources: CLO Asset Manager, Top firms for distressed investing. Solving for brand and deal experience more than ability to growth within the organization., Life as a CLO Analyst + Career Progression, Credit Hedge Fund opportunities, Top firms for distressed investing. Solving for brand and deal experience more than ability to growth within the organization.