Collateralized Loan Obligations (CLOs) have become increasingly popular in the world of finance over the past decade. CLOs are complex financial instruments that pool together a portfolio of corporate loans and issue notes of varying credit ratings to investors. In recent years, CLOs have been touted as a safe and attractive investment option due to their ability to offer higher yields than traditional fixed-income securities.
Marathon Asset Management, a global investment advisor based in New York, has recently closed a $400 million new issue CLO. The Bryant Park Funding 2023-19 Ltd. is the first new CLO executed by Marathon’s global Performing Credit platform in 2023, as well as the first under the firm’s Bryant Park Funding shelf. The CLO is focused on high-quality, liquid, broadly syndicated senior secured loans with an emphasis on capital preservation, lower volatility, and structural durability.
In this article, we will explore the rising popularity of CLOs and what makes them an attractive investment option. We will also delve into the specifics of Marathon Asset Management’s Bryant Park Funding 2023-19 Ltd. CLO and what sets it apart from other CLO offerings in the market.
What are Collateralized Loan Obligations?
CLOs are complex financial instruments that pool together a portfolio of corporate loans and issue notes of varying credit ratings to investors. The loans are usually sourced from a variety of banks and financial institutions and are typically rated below investment grade.
CLOs are structured in a way that allows investors to invest in different tranches of the security based on their risk tolerance. The senior tranches have the highest credit rating and are paid first, while the lower-rated tranches have a higher yield but also carry a higher risk.
Why are CLOs Attractive Investment Options?
CLOs are attractive investment options because they offer higher yields than traditional fixed-income securities. This is due to the fact that the loans in a CLO portfolio are typically rated below investment grade and offer higher returns to compensate for the higher risk. CLOs are also known for their diversification benefits, as they pool together loans from different sectors and industries.
Another reason why CLOs are attractive is that they are generally considered to be less sensitive to interest rate changes than other fixed-income securities. This is because CLOs have floating rate coupons that adjust with changes in interest rates, which helps to mitigate interest rate risk.
Marathon Asset Management’s Bryant Park Funding 2023-19 Ltd. CLO
Marathon Asset Management’s Bryant Park Funding 2023-19 Ltd. CLO is focused on high-quality, liquid, broadly syndicated senior secured loans with an emphasis on capital preservation, lower volatility, and structural durability. The CLO has been priced at very attractive levels and has garnered broad interest from the CLO investor community.
Karen Lau, Managing Director and Senior Portfolio Manager for Marathon’s CLO Strategy on Bryant Park 2023-19, said, “This is a conservatively positioned portfolio, resulting from Marathon’s time-tested fundamental credit research process and disciplined portfolio construction guidelines to identify strong credits within the senior secured loan universe.”
The Bryant Park Funding CLO program is known for its emphasis on capital preservation, lower volatility, and structural durability. This is achieved through a rigorous credit research process that is focused on identifying strong credits within the senior secured loan universe.
Conclusion
Collateralized Loan Obligations have become increasingly popular in the world of finance due to their ability to offer higher yields than traditional fixed-income securities. Marathon Asset Management’s Bryant Park Funding 2023-19 Ltd. CLO is the latest offering in this space and is focused on high-quality, liquid, broadly syndicated senior secured loans with an emphasis on capital preservation, lower volatility, and structural durability. The CLO has been priced at very attractive levels and has garnered broad interest from the CLO investor community.
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