Whitelists are increasingly cropping up in conversations with European leveraged loan investors.

The impact of whitelists on loan prices can be dramatic: witness the recent sell-off in loan prices for Accell, the Dutch e-bike business into the 30s, a price level sharply lower than many CLO investors believe is fair value. This is mainly due to the lack of traditional buyers in the 50s and 60s, with these funds not included in whitelists, and therefore prohibited from buying into a situation until an insolvency or payment default — when it is too late.

Restructuring outcomes can differ too. GenesisCare is often cited as an example of how whitelists have worked against investors and created adverse outcomes.

But in a more dangerous world where creditor-on-creditor violence is rife, can their presence protect investors as well as sponsors? Or conversely, is it allowing sponsors to leverage off their CLO relationships to recapitalise distressed investments for very little fresh capital investment, while PIKing interest and delaying and praying for another day?