Banks and Insurers to Weigh Buying More CLOs: Structured Weekly

Looser regulations for banks and insurance companies portends an increase in collateralized loan obligations purchases, according to Bank of America.

“Regulatory tailwinds are emerging for CLO demand,” wrote strategists including Pratik Gupta in a note dated Friday. “In the US, changes to capital requirements are expected to increase bank and insurer appetite for CLOs, especially AAA-rated tranches.”

Regulators are expected to announce plans to ease a key capital buffer for banks this week. The potential changes would cut banks’ capital requirements by up to 1.5 percentage points for the largest lenders, in turn allowing them to make more investments in ...