Deborah Festa, Milbank Alternative Investments Practice partner, was recently quoted in a Bloomberg article titled “Junk Bonds May Be on Menu for CLOs as Prop Trading Rules Ease.” The article discusses how CLOs may be impacted by the loosening of Volcker Rule regulations. If the restrictions do change, new CLO deals could include a springing bond bucket clause, which would allow CLOs to purchase bonds. "I’m not seeing springing bond buckets yet, but we could see that come back,” says Ms. Festa. “We could come back to a world where up to 10 percent of CLO assets are bonds.”
