Fitch: Breadth of CLO Manager Options Increases Focus on Risks

NEW YORK--(BUSINESS WIRE)-- Strong U.S. CLO issuance has led to an increase in the number and types of CLO managers. For investors, the broad array of options makes focusing on risks and understanding the manager even more important, according to a new Fitch Ratings report.

Assessing the operational platform of a CLO manager is valuable for investors. A very active market makes reviews even more informative. Add the ever-evolving regulatory environment to the mix, including risk retention rules, and understanding a CLO manager's capabilities becomes that much more important. This is why Fitch's CLO asset manager review process focuses on factors such as an organization's history, infrastructure and controls when managing CLO assets.

"Business concentration and a smaller investor base can make newer CLO asset managers more vulnerable to event risk," said Director Russ Thomas. "This risk can be mitigated by demonstrating shareholder commitment and sufficient cash to fund operations in adverse markets, making a proven ability to navigate market cycles a desired trait for managers."

A lack of separation of responsibilities and independent oversight can also pose control issues for some smaller CLO asset managers. Additionally, formalized risk management and controls are not always a priority for smaller managers, given their limited resources. Larger, institutionally-affiliated managers have established robust frameworks that go beyond compliance with regulation. Moreover, simple investment strategies in a well-identified area can offset the risks posed by limited resources.

Investor confidence in the manger is especially important whenever broader market sentiment changes. "Although the current credit environment is benign, noticeable differences in CLO performance and how the portfolios are managed tend to appear as broader economic conditions deteriorate," said Thomas.

'Case Study: Evaluating Your CLO Manager' is available at 'www.fitchratings.com' or by clicking on the link above.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Case Study: Evaluating Your CLO Manager (In an Expanding CLO Market, Do You Know Your Manager?)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864456

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Fitch Ratings
Russ Thomas, +1 312 368 3189
Director
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Alyssa Castelli, +1-212-908-0540
Media Relations, New York
[email protected]
or
Elizabeth Fogerty, +1-212-908-0526
Media Relations, New York
[email protected]

Source: Fitch Ratings

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• After Market Entry, What Comes Next?
• Wrangler's Roost Expands Availability of Historic New River Property for Private Gatherings and Visitor Use
• Orano Med Provides Half-Year Progress Report and Business Outlook