The conundrum of overlapping
Investors holding multiple CLO tranches be warned: the risks of overlapping exposure must be fully understood and dealt with
An increasingly visible complication associated with the continued imbalance between supply and demand in the leveraged loan market, and the pressures this is putting on CLO managers competing for a limited supply of good quality paper, is overlapping.
The problem of overlapping has been exacerbated by a relatively high level of prepayments in the loans market. The result, advised a Dresdner Kleinwort report written in February 2007, is that "investors holding multiple CLO tranches may have some
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