Highland specializes in Collateralized Loan Obligations (CLOs), which are a diversified pool of senior secured bank loans typically financed through the issuance of AAA to BB rated debt and an equity tranche. CLOs seek to generate returns from the spread difference between the underlying portfolio of assets and the money borrowed to finance those investments.
One of the key characteristics of a CLO is the long-term, non-mark to market financing of the structure, which allows the CLO’s performance to be driven by the underlying fundamentals of the loans rather than technically-driven market value changes. A CLO’s equity tranche provides an attractive, consistent current income component that can withstand various economic environments given the diversified collateral and nature of the financing.
Highland is the largest CLO manager by AUM in the U.S., and has structured and monitored 35 CLOs/CDOs with approximately $30 billion in total assets.1
Primary CLO Issuance
- Participate in new issuance of CLOs at different levels of the capital structure with varying risk/return profiles
- Lock in attractive long-term non mark-to-market financing, while generating high current distributions through a diversified pool of senior secured loans
- Highland issued the first broadly syndicated CLO in 1996 and remains a leader in the strategy
CLO Security Investment Management
- Invest in CLO debt and equity in the secondary and primary markets
- Secondary CLO debt tranches currently offer historically attractive yields, floating interest rates and significant convexity for investment grade rated risk