Hildene’s Mehra Sees 2020 as Testament to Viability of CLOs

The video discusses the CLO market, highlighting the unexpected recovery despite initial distress and loan defaults. It explains the protections offered by CLO structures, including hard subordination and excess spread, and the high default rates needed to impact mezzanine tranches. The video also examines liquidity in the market, the role of CLO managers, and investment opportunities in mispriced options. Finally, it covers the consumer credit market's response to government interventions during the crisis.

What was the main concern regarding distress in the market over the last year?

How did the silo structure perform during unprecedented credit stress?

What factors contributed to the recovery in prices across the board?

What are the implications of low recovery rates in the market?

How do silo managers utilize market volatility to improve portfolios?

What are the potential investment opportunities within silo structures?

What role did the government response play in the credit markets during the crisis?