Structured Finance Partner Sean M. Solis Quoted in Multiple Reuters Articles on CLOs and Distressed Opportunities

Milbank Structured Finance partner Sean M. Solis was quoted in Reuters articles on collateralized loan obligations (“CLO”) and opportunities in the distressed market.

The article, “CLOs Seek to Tie Assets to Loan Index After Missing Out on COVID Selloff,” highlights the push by US CLO managers to have the ability to buy loans at increasingly reduced prices after being boxed out of distressed opportunities when the COVID-19 pandemic initially took hold in March 2020. CLOs would have had a better opportunity to take advantage of plunging prices in March if the ability to purchase discounted loans without penalty had been linked to an index responsive to market volatility. Requesting flexibility, some CLO managers are asking a lower minimum price at which these debts can be purchased. According to Mr. Solis, many CLOs have a minimum price at which loans can be purchased, often 60-65 cents. He states, “There were real opportunities to buy discounted loans in March that were trading in the 50s, but CLOs couldn’t buy.”

In “CLOs Seek Flexibility for Distressed Assets Amid Lender Competition,” the Reuters article published earlier this year, Mr. Solis noted on the topic, “The dynamic we have seen is that non-CLO lenders would pick up the distressed loans and would drive the restructuring and the economics of the restructured debt. The non-CLO lenders are keenly aware that by putting all the economics in a super-priority loan, (the existing CLO lenders) would be much more subordinated.”