Crusaders of 'Save the CLO' make their stand as rules deadline looms

New York

THE race is on to save the biggest buyers of leveraged loans from the financial world's endangered species list.

Less than five months remain before strict new curbs are imposed on managers of collateralised loan obligations, which purchase and repackage about 60 per cent of the loans used to help fund US takeovers. Sales of CLOs have already plummeted by more than half this year to US$32 billion partly in anticipation of the rules, which were written in the aftermath of the 2008 financial crisis and take effect on Dec 24. After that, CLO managers such as Carlyle Group LP and Apollo Global Management LLC must retain a 5 per cent stake in the products they help create - a change that trade associations say will sap funding for corporate America.