Winding Up — It’s finance, Jim, but not as we know it
- 9fin team
Not every loan will be performing. It’s this simple fact that inextricably links the world of structured credit to distress.
We’re working on a broader educational piece that covers the topic of CLOs in restructurings, so we’ll keep our remarks on the topic brief.
What is a CLO, exactly? It’s a type of security backed by a bunch of corporate loans and (occasionally) bonds. CLOs are structured in a series of tranches, from triple-A down to an equity tranche which picks up residual interest proceeds.