CLO Warehouses Liquidated by Axa, Steele Creek in Rare Step (1)

Two funds that aimed to bundle leveraged loans into bonds decided instead to liquidate the loans they had bought, a rare step reflecting just how the pandemic has cooled the market for securities known as collateralized loan obligations.

Steele Creek Investment Management and AXA Investment Managers both sold off loans they had planned to package into CLOs, according to people familiar with the matter. The funds had paid for the loans using temporary lines of credit known as warehouses.

Leveraged loan prices plunged to their lowest level in more than a decade in March, leaving CLOs increasingly struggling to find ...