Cash Loans Are Bid Up By CLOs Returning From JPM HY Conference
As the JP Morgan High Yield Conference wraps up today (at yet another boondoggle in the Loews hotel in South Beach), and CLO managers get back to their respective cubicles and start having to come up with investment ideas to justify the $500 mini bar bills, the cash loan market has been getting significantly bid up. Names that have gotten the strongest bid interest are the CLO eligible names which trade above 80 cents on the dollar. The 80 cent price is a cut off, as any CLO purchases below the threshold must be held at that price until the loan trades up to a certain price for a certain number of days (usually 90 cents for 10-20 days). Also holding a cash loan at a below-80 price can potentially trigger an overcollateralization test which all CLOs dread.