BofA Sees Insurers Buying More AAA CLOs: Structured Weekly

Insurers are likely to buy more top-rated collateralized loan obligations after the debt performed well in recent stress tests conducted by an industry body, according to Bank of America.

In the results of tests released recently by the National Association of Insurance Commissioners — a group that helps set standards for state regulators — most CLO bonds rated AAA, AA and A garnered better marks on risk than they’re currently assigned, strategists including Pratik Gupta wrote in the Sept. 20 note.

That should drive up demand for these tranches from insurers, they wrote. Issuance of CLOs, which repackage loans into ...