Reset Wave Injects New Life Into $1 Trillion CLO Market

The biggest buyers of leveraged loans have gained the freedom to purchase more of the debt in recent months after refinancing their liabilities.

Fund managers that buy loans and bundle them into bonds known as collateralized loan obligations could have some $100 billion more to freely invest over time compared with a year ago, largely thanks to bankers springing into action in recent months to modify the vehicles.

When CLO managers raise money by issuing bonds, they typically have as long as five years to buy loans with the proceeds with relatively few investment restrictions, known as the reinvestment period. ...