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Global credit funds & CLO's
April 2023 | Issue 253
Published in London & New York.
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April 2023 | Issue 253
Past returns
UBS gives up on CLOs
10 years ago, officials at UBS told Creditflux they were not closing their CLO origination business, despite mounting evidence to the contrary.
In the months prior to the statement, the bank had let go of several key figures on its CLO desk and had cleared its pipeline. And it did indeed wind down its CLO unit. The head of the group, Anthony Pawloski, left for Ares Management a month later.
UBS has since focused on wealth and asset management. But it is poised to get reacquainted with CLOs after agreeing to buy Credit Suisse.
Points up front
AI finds vital new purpose: drafting CLO poems
Artificial intelligence may one day give us answers to really big questions. But for now, we’ll have to make do with ChatGPT’s CLO-based poetry, as highlighted by aficionado Poh-Heng Tan. “In the world of finance, a unique creature A CLO is born, with loans as its feature” starts the epic.
But our favourite is the closing stanza, which neatly encapsulates the struggle the CLO industry has faced against regulators and haters in the mainstream media. “Some say CLOs are risky, with loans that may sour But with CLO managers, risk they can devour.”
It might not be Shakespeare, but it’s not far off.
Bill Shakespeare: if the bard were alive today, he would chill out and ask ChatGPT to write The Merchant Of CLOs
…and fixing the industry
At the Creditflux US CLO Summit, our very own Charlie Dinning found a use for ChatGPT. Egged on by his panellists (who were readying themselves to discuss technology in the CLO market), our star CLO data journalist keyed in the question: “How do we bring the leveraged loan and CLO markets into the 21st century?”
Dinning reeled off the surprisingly astute response from the bot (automation, predictive analytics, real-time data and enhanced transparency) — and then asked his panellists why the CLO market has been so slow to adopt technology, when ChatGPT took seconds to figure out the issues.
“You’re going to rub someone up the wrong way doing that”
Capra Ibex chief investment officer Michael Kurinets and Hildene Capital Management portfolio manager Tapan Jain jostled over a hypothetical CLO at the Creditflux US CLO Summit.
Jain reasoned that calling the CLO could deliver a strong return on the debt, but Kurinets warned that the CLO manager would not be happy if it was called early.