Specialist asset managers minted CLOs worth more than half a trillion dollars in 2021, a year of heavy post-pandemic monetary stimulus. S&P Global estimates that more than one in 25 U.S. businesses and almost one in 25 European companies will default by March 2024. That has squeezed equity returns, and without equity investors, CLOs cannot be put together. S&P calculates that while CLO equity investors were able to get a 15% annual return before 2022, deals priced now would offer about 7%. "The (CLO) equity doesn't make enough money to justify buying it."

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Persons: Florence Lo, CLOs, Morgan, Rob Shrekgast, KopenTech, Neha Khoda, It's, Marta Stojanova, You've, Aza Teeuwen, Laila Kollmorgen, Kollmorgen, tranches, BoFA, Naomi Rovnick, Chiara Elisei, Dhara Ranasinghe, Alexandra Hudson Organizations: REUTERS, Bank of America, Casino, Bed, TwentyFour, PineBridge Investments, Alexandra Hudson Our, Thomson Locations: CLOs, U.S