{"id":17215,"date":"2025-11-27T10:28:14","date_gmt":"2025-11-27T09:28:14","guid":{"rendered":"https:\/\/infinigon-capital.com\/interesting-facts\/"},"modified":"2026-03-16T11:07:07","modified_gmt":"2026-03-16T10:07:07","slug":"interesting-facts","status":"publish","type":"page","link":"https:\/\/infinigon-capital.com\/en\/interesting-facts\/","title":{"rendered":"Interesting facts"},"content":{"rendered":"
Our investment strategies<\/a><\/div><\/div>\n\n

Collateralized Loan Obligation (CLO)<\/h3>\n\n

A CLO is a structured loan securitization consisting of a portfolio of senior corporate loans. These loans are divided into different tranches with varying risk profiles and issued to investors. <\/p>\n\n

Senior Secured Loans<\/h3>\n\n

Loans that are secured by the borrower’s assets and are repaid before other debts in the event of default.<\/p>\n\n

Capital structure\/tranches<\/h3>\n\n

CLOs are divided into different risk levels (\u201ctranches\u201d), which have different repayment priorities. The main categories are: <\/p>

  • Senior tranche<\/strong> \u2013 the safest tranche with the highest priority for repayments and the lowest return.<\/li>
  • Mezzanine tranche<\/strong> \u2013 medium risk and medium return, receives payments after the senior tranche.<\/li>
  • Equity tranche<\/strong> \u2013 the riskiest tranche, which absorbs losses first but has the highest potential return.<\/li><\/ul>\n\n

    Interest (coupon)<\/h3>\n\n

    The regular interest payment that CLO investors receive on their shares. Senior tranches typically receive a fixed or variable interest rate, while the equity tranche derives its returns from remaining cash flows. <\/p>\n\n

    Overcollateralization test (OC test)<\/h3>\n\n

    A test that ensures the secured assets (loans) in a CLO are sufficient to cover the obligations to investors. If this test fails, cash flows from subordinated tranches can be redirected to senior tranches. <\/p>\n\n

    Interest Coverage Test (IC Test)<\/h3>\n\n\n\n

    Actively Managed CLO<\/h3>\n\n

    Are CLOs whose collateral pool – consisting a wide range of secured loans – is actively managed by credit specialists<\/strong>. This makes those differs from static CLOs, in which the portfolio remains static post issurance.\u00a0<\/p>\n\n

    Balance Sheet CLO<\/h3>\n\n

    CLOs are issued by a bank or financial institution to securitize loans from its own balance sheet and thereby free up capital. Unlike arbitrage-based CLOs, these are primarily used for balance sheet optimization. <\/p>\n\n

    CLO Manager<\/h3>\n\n

    A specialized asset manager responsible for selecting, managing, and monitoring the loans within a CLO portfolio.<\/p>\n\n

    Credit rating<\/h3>\n\n\n\n

    Reinvestment Period<\/h3>\n\n

    The phase (usually 3-5 years after issuance) in which the CLO manager can replace existing loans with new loans to optimize the performance of the CLO.<\/p>\n\n

    Default Risk<\/h3>\n\n

    The risk that a borrower of a loan included in the CLO will not meet their payment obligations, which could negatively impact the CLO’s cash flows.<\/p>\n\n

    Cash Flow Waterfall<\/h3>\n\n

    The hierarchical order in which the cash flows of a CLO are distributed to the various tranche investors. Senior tranches are served first, followed by mezzanine and equity tranches. <\/p>\n\n

    BACKGROUND KNOWLEDGE<\/h4>

    Added value for investors<\/h1>\n\n

    RESISTANCE<\/h4>

    Secured corporate loans have delivered prediominantly positive annual returns over the past 25 years and and have proven to be robust even in times of crisis.<\/b><\/p>\n\n

    DIVERSIFICATION<\/h4>

    CLOs enable broad diversification<\/b> across a large number of corporate loans, helping to reduce concentration risk and the likelihood of sigificant losses.<\/p>\n\n

    OUTPERFORMANCE<\/h4>

    Through active management<\/b> of the underlying loan portfolios, the various tranches of CLOs can generate attractive risk-adjusted returns \u00e2nd benefit from changing market conditions. <\/p>\n\n

    CLOsprovide investors multiple risk-\/return profiles due to the AAA – non-rated tranching.<\/h2>\n\n

    Within CLOs, investors have the opportunity to invest in various tranches. These typically range from “AAA” to “non-rated”<\/b> providing a wide range of investment opportunities. <\/p>
    \n\n

    The multi-layered collateralization within the loan pool ensures stability and security. <\/p>

    In addition, we regularly conduct stress tests to test the resilience of the CLOs in different market scenarios.<\/p>\n\n

    Structure and control<\/h2>\n\n

    Key concepts related to CLOs<\/h2>\n\n

    CLO Management<\/h2>","protected":false},"excerpt":{"rendered":"

    Collateralized Loan Obligation (CLO) A CLO is a structured loan securitization consisting of a portfolio of senior corporate loans. These loans are divided into different tranches with varying risk profiles and issued to investors. Senior Secured Loans Loans that are secured by the borrower’s assets and are repaid before other debts in the event of […]<\/p>\n","protected":false},"author":3,"featured_media":17207,"parent":0,"menu_order":4,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"footnotes":""},"class_list":["post-17215","page","type-page","status-publish","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"\nWhat are CLOs? 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