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Public Fixed Income

Prime Time for CLOs

September 2024 – 4 min read

In this Pensions & Investments Q&A, Adrienne Butler breaks down the qualities that make CLOs a solid investment amid shifting market dynamics and the potential for further rate cuts.

P&I: Is it ‘prime time’ for CLOs today?

“It definitely is prime time for CLOs,” said Adrienne Butler, head of global CLOs at Barings. “We have seen stars align across the industry, both on the issuance side and on the investing side, which makes it a potentially beneficial time to be invested in CLOs.” The firm has seen strong demand for floating-rate products up and down the capital stack, from triple-A rated to equity tranches, she said.

The macro environment, with uncertainty around economic growth and interest rates, is supportive. “Having a diverse pool of assets in a time like this is really important because you don’t have complete visibility on where rates are going to go or on any kind of exogenous shocks or geopolitical events,” Butler said. “Having a highly diverse pool that you can invest in provides you a degree of confidence in what might be a more volatile market.”

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Adrienne Butler

Head of Global CLOs

The document is for informational purposes only and is not an offer or solicitation for the purchase or sale of any financial instrument or service. The material herein was prepared without any consideration of the investment objectives, financial situation or particular needs of anyone who may receive it. This document is not, and must not be treated as, investment advice, investment recommendations, or investment research.

In making an investment decision, prospective investors must rely on their own examination of the merits and risks involved and before making any investment decision, it is recommended that prospective investors seek independent investment, legal, tax, accounting or other professional advice as appropriate.

Unless otherwise mentioned, the views contained in this document are those of Barings. These views are made in good faith in relation to the facts known at the time of preparation and are subject to change without notice. Parts of this document may be based on information received from sources we believe to be reliable. Although every effort is taken to ensure that the information contained in this document is accurate, Barings makes no representation or warranty, express or implied, regarding the accuracy, completeness or adequacy of the information.

Any forecasts in this document are based upon Barings opinion of the market at the date of preparation and are subject to change without notice, dependent upon many factors. Any prediction, projection or forecast is not necessarily indicative of the future or likely performance. Any investment results, portfolio compositions and/or examples set forth in this document are provided for illustrative purposes only and are not indicative of any future investment results, future portfolio composition or investments. The composition, size of, and risks associated with an investment may differ substantially from any examples set forth in this document. No representation is made that an investment will be profitable or will not incur losses. Where appropriate, changes in the currency exchange rates may affect the value of investments.

Investment involves risks. Past performance is not a guide to future performance. Investors should not only base on this document alone to make investment decision.

This document is issued by Baring Asset Management (Asia) Limited. It has not been reviewed by the Securities and Futures Commission of Hong Kong.

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