Collateralized Loan Obligations (CLOs)

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 32 CLOs/CDOs with $29 billion in total assets.1


Strategy Types

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, having structured and monitored 32 CLOs/CDOs with $29 billion in total assets1


Secondary CLO investments

  • Opportunistic investments in CLO debt and equity tranches in the secondary market
  • Secondary CLO debt tranches currently offer historically attractive yields, floating interest rates and significant convexity for investment grade rated risk


1 Source: Moody’s CLO Interest Newsletter, 10/5/2011

Leadership

Mark Okada, CFA - Co-Founder, Chief Investment Officer

Mr. Okada is Chief Investment Officer of Highland Capital Management, L.P. He is responsible for overseeing Highland’s investment activities for its various strategies. Mr. Okada is a pioneer in the development of the bank loan market and has over 25 years of credit experience.
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Amit Walia, CFA - Partner, Co-Head of Research

Mr. Walia is a Partner and Co-Head of Research at Highland Capital Management, L.P.
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Trey Parker - Managing Director, Co-Head of Research

Mr. Parker is Managing Director and Co-Head of Research at Highland Capital Management, L.P.
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Josh Terry, CFA - Managing Director, Head of Structured Products and Trading

Mr. Terry is Head of Structured Products and Trading at Highland Capital Management, L.P. He leads the trading desk, structured products and CLO fund management teams
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