Hi guys:
I was just wondering if someone could shed some light on what an CLO analyst for a fund would be doing please? It seems similar to high yield credit analyst role, with more names to monitor, and can be a bit less active, would this understanding be correct? Given the current regulatory environment, it seems that they are cutting down due to more restrictions?
Thank you!
Depends. You need to distinguish between investing in CLOs vs investing for a CLO.
Are they managing the structure? or are they buying CLO equity & mezz paper from other managers?
Assuming they are managing the structure - its basically credit Asset Management with 10-12x leverage. Its very similar to high yield, but managing lower yielding & safer paper.
CLO market is very active currently and a lot of people are hiring for these jobs. The regulatory overhang is pushing people to launch a lot of deals ASAP. Because CLOs are basically levered CEFs, they have permanent capital for about 8yrs and offer relatively good job security regardless of market inflows/outflows.
Second this. I'd also observe that most CLO managers either are, or have ambitions to be, diversified credit managers-many of the biggest CLO issuers are affiliated with PE/hedge funds like KKR/GSO or large Asset Management platforms like Babson, ING, Invesco etc. Also most of the smaller/independent managers have some other type of credit product-distressed funds, credit opportunity funds, etc.
thanks guys!
does any one know how strong Man Group/GLG's CLO platform is in Europe? Thank you!
They have some deals under their belt, though performance isn't the best and would probably rate them as a middle tier manager. In my view the stronger euro CLO teams are the likes of Harvest/Investcorp, Carlyle Euro, GSO Euro, etc.
I don't really think of them as a meaningful player but I could be wrong (Euro not my strong suit). I think I just read that GLG was doing their first post-crisis CLO. They've also bought several credit managers with CLO platforms (Silvermine and one other I'm blanking on) but I don't recall either of them having European deals and I don't know how they are/will be integrated w overall Man/GLG.
One thing I would observe is that funds have a history of going on adventures in CLO management only to wind-down/exit the business. Lots of managers printed a few deals pre-crisis only to get bored/sell the business/etc when issuance slowed-remember that CLOs, unlike many types of funds, effectively can't be raised during times of crisis. Also, CLO management is a great compliment to a credit business and very scale-able but requires critical mass to support a lot of the compliance, reporting, volume of credit underwriting, etc needed.
For that reason I would tread lightly at the idea of joining a small CLO group at this point in the cycle unless it's integrated with a broader HY team.
Repellat accusantium occaecati facere vel sit incidunt. Est provident ea repellendus fuga. Rerum possimus dolores sit rerum et error. Eos dolores rerum consequatur odio magnam doloribus.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...