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Hedge Funds Targeting European CLOs July 16, 2010

-- Daniel O’Leary
U.S. and European hedge funds have recently taken interest in collateralized loan obligations, chasing big yields unobtainable in most other asset classes. “European CLOs are one of the only asset classes where investors can pick up the yields they’re after,” said Shawn Cooper, v.p. asset-backed securities and collateralized debt obligation trading-global markets at Deutsche Bank. “Maybe distressed commercial mortgage-backed securities too, but then investing in CMBS requires a very different type of analysis.”
It is possible for investors to pick up yields in excess of 15-20% with10-15% subordination buying primarily A and BBB ...

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