BofA Expects Share of CCC Loans in CLO Portfolios to Increase

BofA Securities expects the CCC share of leveraged loans in collateralized loan obligation portfolios to increase by 0.5% to 0.7% in August as a result of a pick up in downgrades.

• In July, the pace of CCC downgrades in CLOs went up, reversing an 18-month trend of a stable or declining CCC concentration, wrote BofA analysts led by Pratik Gupta in their weekly note
  • Debt issuers including Avaya, Bausch Health Cos. and Weber-Stephen Products LLC were downgraded by S&P Global Ratings
  • The downgrades were driven by “expected weaker operating performance, inflation and supply chain pressure, rising material and labor ...