KBRA releases research that examines the different strategies adopted by U.S. collateralized loan obligation (CLO) managers. An individual CLO manager’s style or approach to investing in a pool of leveraged loans can vary compared to its peers.

In this update, we examine cross-metric comparisons that could offer insight on potential strategies employed across the market, and we focus on some of the main differences between CLO managers following these metrics. We made some simplified assumptions around the various CLO metric pairings and quadrants under which any given CLO manager’s transactions are classified. The governing classifications used in this report are Opportunistic and Conservative; however, these classifications are not intended to imply any positive or negative sentiment. Rather, they are being utilized for information purposes to display and distribute the data.

Key Takeaways

• There is modest turnover among the most opportunistically leaning managers, with seven managers remaining in the top 10 versus December 2022. These steadily opportunistic managers include Fortress Investment Group, Birch Grove Capital, Credit Suisse Asset Management, KKR Financial Advisors, Hayfin Capital Management, Nuveen (formerly known as Symphony Asset Management), and Anchorage Capital Group. We note that of the managers who migrated out of the most opportunistic set, they are still among the most opportunistic 25% of the study population.
• There is a mild degree of turnover among the most conservatively leaning managers. Five managers—Trimaran Advisors, Whitebox Capital Management, Sculptor Loan Management, ORIX Advisers, and Benefit Street Partners—remain in the most conservative set versus December. We note there are more managers that fall into the conservative set than the opportunistic one, with less differentiation among them. For instance, three of the five managers who fell into the category in December are still among the most conservative 25% of the population.
• Conservative managers are more convincingly conservative than opportunistic managers are convincingly opportunistic, and this distinction is greater than in December 2022. Of the top conservative managers, four had nine cross-metric comparisons firmly in the conservative quadrant and five had eight cross-metric comparisons in the conservative quadrant. In contrast, only six of the most opportunistic managers have seven or more cross-metric comparisons in the opportunistic quadrant.

Click here to view the report.

Related Publications

• 2023 Structured Credit Sector Outlook: A Whole New World?
• U.S. CLO Manager Style Comparisons
• European CLO Manager Style Comparisons: April 2023 Update

About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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