Investor Portal
Home » Insights » Understanding Par Value in CLOs

Understanding Par Value in CLOs

  • Strategy Deep Dives

Par value is the cornerstone of CLO structures, shaping investor protections and serving as a key measure of a manager’s skill.

The first edition of our CLO Insights Series explores the central role of par value with a focus on:

  • Why par value sits at the heart of CLO structures
  • How Over-Collateralisation and Interest Coverage tests protect investors
  • The mechanics of par build and par erosion
  • What these dynamics reveal about CLO manager performance

For institutional investors, understanding par value dynamics is essential for CLO evaluation and manager selection.

Read our analysis, produced in association with Weil, Gotshal & Manges (London) LLP, below.

Download Understanding Par Value in CLOs

Click to download

 

Robert Reynolds

Managing Director, Head of CLOs

Robert is a Managing Director and Head of Collateralised Loan Obligation (‘CLO’) for Pemberton. CLOs invest in broadly syndicated leveraged loans and Robert is responsible for building Pemberton’s CLO business into an innovative platform.

More about Robert Reynolds

Other Insights Within the Same Category

  • A Day in the Life of a CLO Analyst

    A Day in the Life of a CLO Analyst

    Introduction At the core of CLO Management is the judgement and expertise of the analyst pool. Not only do analysts need deep accounting knowledge and well-honed commercial skills, but also the ability to work accurately under time pressure. In this CLO Insights, one of the Indigo analysts describes a typical day. A Varied and Interesting […]

  • On the Shoulders of Giants

    On the Shoulders of Giants

    CLOs are a relatively recent innovation, but the investment principles that underpin them have developed over generations. This article traces the ideas, and the thinkers behind them, that continue to shape CLO portfolio management today.

  • CLOs and Monetary Policy Transmission

    CLOs and Monetary Policy Transmission

    Introduction CLOs are floating rate products, which means that both assets and liabilities are linked to prevailing market rates (benchmark interest rates). This is one of the matching principles that underpins the CLO model (see CLO Insights – CLOs for All Seasons) and serves to reduce duration risk. This feature also has an incidental role […]

  • Traded vs. Settled

    Traded vs. Settled

    Most collateralised loan obligation (CLO) metrics, including Portfolio Profile Tests, Collateral Quality Tests and CLO Coverage Tests, are calculated using the traded balance. Cash flow available to pay noteholders, however, depends solely on the settled balance: the principal and interest that have actually been received. Managing the gap between the two is a core part […]

  • A Guide to CLO Documentation

    A Guide to CLO Documentation

    CLO Documentation can seem daunting at first, but every document exists for a reason. In our latest CLO Insights Series, produced in association with Weil, Gotshal & Manges (London) LLP, we walk through the full suite of documents that govern a CLO: what they contain, how they fit together, and why they matter to investors.

  • CLO インサイトシリーズ

    CLO インサイトシリーズ

    過去数か月にわたり、Pembertonは投資家の皆様に CLOへの理解を深めていただくことを目的として、Weil, Gotshal & Manges（ロンドン）法律事務所との協力のも と、「CLO Insights Series」を発行してまいりました。本冊 子の目的は、これらのインサイトを一つにまとめ、CLOの 内部構造を紐解きながら、その本質的な仕組みに迫るこ とにあります。 複雑な概念をできる限り明確で分かりやすい言葉に置き 換えることで、レバレッジド・ローン市場における基礎的な 借り手と、CLO投資家の双方に利益をもたらす金融イン フラの一分野について、有益なガイドとなることを願って います。 CLOの世界についての本インサイトをお楽しみいただけ れば幸いです。

  • CLO Risk Retention Deep Dive

    CLO Risk Retention Deep Dive

    Risk Retention, sometimes referred to as ‘skin in the game’, is an important requirement serving to align the interests of investors and other parties in a CLO transaction.  In our latest CLO Insights Series, we take a deep dive into the Risk Retention Rules, examining how they apply under both EU and UK securitisation regulations […]

お問い合わせ

詳細情報をご希望の場合やご質問はお気軽にお問い合わせ下さい。

連絡先

By accessing this website, you acknowledge and agree to the following terms:

The information, materials, products and/or services available on or through this website are not intended to and do not constitute an offer to sell, or a solicitation of an offer to buy any securities, including  interests in any fund or the services of any company, in any jurisdictions where such offer, solicitation or sale would be unlawful, or to any person to whom it would be unlawful to make such an offer, solicitation or sale.  In particular, securities or investment services may only be offered or sold, and transactions effected, in certain jurisdictions in accordance with applicable law and as disclosed in the relevant private placement memorandum or offering document to eligible investors or otherwise in compliance with our Terms and Conditions of Use.

Pemberton Capital Advisors LLP, together with its affiliates and/or subsidiaries (collectively, “Pemberton”) may not be licensed or registered in all jurisdictions and may be unable to provide investment advisory services in certain jurisdictions  or to certain t categories of investors, whether through separately managed accounts or via  private funds.

This website is directed only at persons who are (i)investment professionals (ii) professional clients(iii) persons having professional experience of investing in unregulated schemes(iv) high net worth companies, partnerships, associations or trusts and personnel of any of the foregoing having professional experience of investing in unregulated schemes (each within the meaning of the UK Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001 and the UK FCA Handbook, as applicable). 

Persons accessing this website from outside of the United Kingdom do so at their own initiative and are responsible for compliance with applicable local laws and regulations. Access is permitted only to persons who may lawfully access it without Pemberton being required to be licensed, registered, or approved in any other jurisdiction. 

No person who is not an intended recipient should access or rely on any information contained in this website. Pemberton will not make any investment or investment activity referred to on this website available to any person who is not an eligible investor under applicable law.

This website and all materials on it or available via it do not and are not intended to offer for sale or promote the offer for sale of the securities, including fund interests of any fund or private fund in the United States or to a U.S. person as defined in Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or the services of any Pemberton company.

Access to the information contained in this website is restricted under applicable U.S. federal and state securities laws. The securities of any fund or compartment of a fund managed and/or advised by Pemberton have not been and will not be registered with the U.S. Securities and Exchange Commission under the Securities Act or any state securities laws in the United States, and may not be offered or sold into, within the United States or to or for the account of any U.S. person except pursuant to an exemption from or in a transaction that is not subject to the registration requirements of the Securities Act or applicable state law.

Please confirm acceptance of the Terms and Conditions of Use
Terms & Conditions