Daily News: August 27, 2013

Wells Fargo: Mid-Market CLO Defaults Have Bigger Impact

According to Bloomberg, Wells Fargo said defaulted loans in middle-market collateralized loan obligations (CLOs) have a greater impact than assets tied to CLOs from larger companies, which makes selecting a manager all the more important.

Bloomberg noted that Dave Preston, an analyst for Wells Fargo, said in an interview that CLOs that are more broadly syndicated “…need massive defaults with very low recoveries to cause a principal loss… In a middle market CLO, because the assets are unique to that CLO, you’re depending on the manager more.”

To read the entire Bloomberg story, click here.