Understanding the CLO opportunity

With market volatility a recurring theme amid persistent uncertainty, do CLOs warrant investor attention as a low-risk source of attractive income? “CLOs typically offer higher yields than comparably rated corporate bonds. Plus, the high-quality tranches we focus on boast a default-free history, a period that includes the financial crisis," explains Edwin Wilches, who co-leads the securitized products team at PGIM. Senior secured corporate loans represent the primary collateral in CLOs. The loans are pooled into a special purpose vehicle, which issues securities in tranches offering various...