CLO Conference Notes 2020

Abstract

CLOs and Leveraged Loans 2020 was a virtual (online) event held June 16–17, 2020. Many of the speakers and panelists expressed strongly positive outlooks for the CLO and leveraged loan sectors. Although the economic fallout from the coronavirus pandemic was a central theme in many sessions, the dominant view was that leveraged loans and CLOs will be able to weather the storm. Sessions covered include: • Get to Know Your CLO Manager! • Opening Keynote: The Longest US Economic Expansion Comes to an End • The Evolution of CLO Documentation Standards • CLO Master Class for Allocators • The New Normal: Evolution of the 2.0 CLO Manager • LIBOR Transition in a Covid-19 World: Preparation Amidst the Chaos • Mezzanine Investor Roundtable: Getting Your Cash Back to Work! Key Findings • The CLO and leveraged-loan markets have withstood the stresses of early 2020 and are well positioned to handle further stresses that may appear. • CLO notes, especially highly-rated notes from recent vintages, have high levels of credit enhancement and other structural protections that enable them to survive adverse scenarios. • Still, tail risk remains. A double-dip recession or a second wave of COVID-19 could derail expectations and lead to tail-risk scenarios.