A leveraged loan: the squeeze is on

Ellington Management’s Robert Kinderman finds a lack of call protection may be sapping value from leveraged loans

In the midst of a Fed hiking cycle, investors seeking refuge in the fixed income market have flocked to the floating-rate tranches of Collateralized Loan Obligations (“CLOs”) backed by broadly-syndicated leveraged loans.  Half of the leveraged loan market is owned by CLOs, and we’ve seen heavy issuance of broadly-syndicated CLOs