Partner Sean M. Solis Quoted in Bloomberg Article Discussing Limitations CLOs Face in Distressed Markets

Milbank Structured Finance partner Sean M. Solis was recently quoted in a Bloomberg article on collateralized loan obligation (“CLO”) transactions. The article, titled “Hedge Funds Exploit CLO Weakness Laid Bare by Corporate Distress,” discusses the limits that often prohibit CLOs from investing in highly risky assets such as defaulted debt, equity stakes in troubled companies or debtor-in-possession loans. Especially relevant now, amidst the wave of corporate bankruptcies triggered by the economic downturn resulting from the coronavirus pandemic, these constraints cut into the amount of money that CLOs recoup in debt restructurings. “All CLOs to some degree have this problem,” Mr. Solis notes. “There’s a natural limit -- CLOs are never going to have as much flexibility as a hedge fund, bank or private equity that can do pretty much whatever they want if it makes sense economically.”