How a Deluge of Downgrades Could Sink the CLO Market

It takes a large dose of Wall Street alchemy to create the structured finance products known as CLOs, which fund much of corporate America. So collateralized loan obligations naturally came under particular scrutiny as the scale of the coronavirus pandemic became clear in March. Since then, many pockets of the financial markets have rebounded feverishly. But CLO investors are still bracing for the worst: Many expect a cascade of downgrades that will ripple through these complex securities, testi

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