A Closer Look at CLOs
November 11, 2020 by Kerry Pechter
New research into collateralized loan obligations (CLOs), which are helping reshape the investment policies of the life/annuity industry, explores whether they have the same vulnerabilities as the ‘CDOs’ in ‘The Big Short,’ the book and 2015 film starring actor Steve Carell (in photo), Brad Pitt and others.
Collateralized loan obligations, or CLOs, are a type of asset-backed security (ABS) whose returns, relative to their risks, are providing some extra yield to an annuity industry worn down by a dozen years of Federal Reserve low-interest rate policy.