CLO Rule Jolts Market and Puts €26 Billion of Deals in Focus

Around €26 billion ($28.5 billion) worth of collateralized loan obligations are facing scrutiny after European regulators published a set of guidelines that’s sent shockwaves through the asset class.

Money managers have widely used special purpose vehicles to hold part of their securities risk since the introduction of “skin-in-the-game” rules after the financial crisis. The new report appeared to upend that interpretation, leaving CLOs that priced but had yet to settle at risk of compliance breaches and potentially needing changes before they close.