Quotes of the Day

Quoting myself from last November:

“The fact that CLOs didn’t implode like CMOs did in 2008 is “a key driver of their recent popularity” offers me zero solace! Frankly, that’s the sort of magical thinking (‘home prices won’t go down’) that led to the 2008 disaster.”

Quoting Bloomberg this morning:

“Interest and principal payments are at risk of being cut off for investment-grade CLOs in around a dozen different transactions totaling a few billion dollars, according to people with knowledge of the matter. The notes at risk have ratings as high as the A tier, well within high-grade territory, and were sold by name-brand money managers like Marathon Asset Management and Pretium Partners, the people said.”

“Loans are getting downgraded and their value is dropping, which is triggering protections designed to protect the safest securities issued by CLOs, those rated AAA.”

Also, from the 6:00-mark to the 10:00-mark in the video below (also from last November) I touched on conditions at the time, and on the corporate debt/CLO mess that I felt would spell disaster when the next recession arrived:

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