An overview of CLOs (2024)

Table of Contents
Learn more about this securitization product created to acquire and manage a pool of leveraged loans. Learn about U.S. Bank Related content Changes in credit reporting and what it means for homebuyers These small home improvement projects offer big returns on investment What is CSDR, and how will you be affected? Webinar: Mortgage basics: Finding the right home loan for you How to fund your business without using 401(k) savings Dear Money Mentor: What is cash-out refinancing and is it right for you? Can ABL options fuel your business — and keep it running? How to get started creating your business plan Collateral options for ABL: What’s eligible, what’s not? ABL mythbusters: The truth about asset-based lending What’s the difference between Fannie Mae and Freddie Mac? Are you ready to restart your federal student loan payments? Ask an expert Q&A: European CLO market outlook 4 benefits of independent loan agents Middle-market direct lending: Obstacles and opportunities At your service: outsourcing loan agency work 4 questions you should ask about your custodian Maximizing your infrastructure finance project with a full suite trustee and agent How to maximise your infrastructure finance project How jumbo loans can help home buyers and your builder business Prioritizing payroll during the COVID-19 pandemic 5 tips to help you land a small business loan Streamline operations with all-in-one small business financial support How to establish your business credit score Opening a business on a budget during COVID-19 When to consider switching banks for your business What are conforming loan limits and why are they increasing Evaluating interest rate risk creating risk management strategy Tech lifecycle refresh: A tale of two philosophies Beyond Mars, AeroVironment’s earthly expansion fueled by U.S. Bank Test your loan savvy Webinar: Mortgage basics: What’s the difference between interest rate and annual percentage rate? How do I prequalify for a mortgage? Can you take advantage of the dead equity in your home? Webinar: Mortgage basics: How much house can you afford? Is a home equity line of credit (HELOC) right for you? 8 steps to take before you buy a home Webinar: Mortgage basics: 3 Key steps in the homebuying process Webinar: Mortgage basics: Buying or renting – What’s right for you? How to use your home equity to finance home improvements Webinar: Mortgage basics: What is refinancing, and is it right for you? Should you get a home equity loan or a home equity line of credit? 6 questions to ask before buying a new home What is refinancing a mortgage? What to know when buying a home with your significant other Webinar: Mortgage basics: How does your credit score impact the homebuying experience? What is a home equity line of credit (HELOC) and what can it be used for? Is it the right time to refinance your mortgage? Overcoming high interest rates: Getting your homeownership goals back on track Money Moments: How to finance a home addition 10 uses for a home equity loan Is a home equity loan for college the right choice for your student How to apply for federal student aid through the FAFSA What to consider before taking out a student loan Common unexpected expenses and three ways to pay for them How I did it: Paid off student loans The A to Z’s of college loan terms Costs to consider when starting a business Questions to ask before buying a car Webinar: Mortgage basics: Prequalification or pre-approval – What do I need? Your financial aid guide: What are your options? An investor’s guide to marketplace lending IRC Section 305(c): Deemed distributions and related regulations What is a CLO? The ongoing evolution of custody: Tips for renewing your custody contract Personal loans first-timer's guide: 7 questions to ask Bank vs. brokerage custody What you should know about buying a car What you need to know before buying a new or used car Take the stress out of buying your teen a car How to choose the best car loan for you Practical money skills and financial tips for college students Co-signing 101: Applying for a loan with co-borrower What’s a subordination agreement, and why does it matter? Understanding the true cost of borrowing: What is amortization, and why does it matter? How to use debt to build wealth How I did it: My house remodel Everything you need to know about consolidating debts Student checklist: Preparing for college Webinar: Uncover the cost: College diploma Your quick guide to loans and obtaining credit 4 questions to ask before you buy an investment property Parent checklist: Preparing for college Evaluating interest rate risk creating risk management strategy

July 05, 2023

Learn more about this securitization product created to acquire and manage a pool of leveraged loans.

A collateralized loan obligation (CLO) is a securitization product created to acquire and manage a pool of leveraged loans. CLOs issue multiple debt tranches along with equity and use the proceeds from the issuance to obtain a diverse pool of syndicated bank loans. Interest and principal cash flows generated from the underlying collateral pool flow through the CLO and are distributed to debt and equity investors. Each debt tranche carries a different risk/return profile based on credit quality, risk of loss and priority to cash flow distributions. Structural features of the CLO, including coverage, diversification and exposure tests, dictate cash flow mechanics and further add to the risk/return profile.

Investment options range from AAA-rated debt tranches to non-rated equity. Banks, asset managers, insurance companies, pension funds, mutual funds, hedge funds and high net worth individuals are active investors in the CLO market and are attracted to the variety of risk/return options.

Given the complexities of the CLO structure and nuances of the bank loan asset class, it’s helpful to partner with an experienced service provider.

At U.S. Bank, we combine customized solutions with high-quality service to support even the most complex products and client needs. To learn more about the bank loan and CLO services that we offer, visit our website or contactMike ZakatMichael.zak@usbank.comor 866-894-5957.

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