As the collateralized loan obligation (CLO) market seizes up, bargains are plentiful, according to wary traders.
In 2016, the energy sector collapsed for a short time but decimated the leverage loan market as clean BBs CLO tranches dropped to 50 cents on the dollar. But fears of CLOs paying-in-kind (PIK) didn't materialize, and investors were ultimately paid.
"Why is it that CLO BBs expected to PIK, without any ambiguity, have been traded in the 50s in April?" said one hedge fund CLO trader. "What's different today versus 2016 to inspire . . .
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