CLOs Get Volcker Rule Reprieve to Buy More Than Leveraged Loans

The $700 billion CLO market will soon be able to purchase junk bonds and potentially other, riskier securities alongside leveraged loans after U.S. regulators eased constraints on some of their biggest investors.

The Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. approved changes to the Volcker Rule on Thursday that expand the types of securities that banks can invest in, paving the way for CLOs to once again include bonds in their pools of assets. What’s more, the moves could possibly allow them to buy equity and equity-like securities, according to some initial interpretations ...