Asset Managers Prepare to Buy Discounted US Loans

Major money managers including Carlyle Group, KKR, and Oaktree Capital are preparing to purchase US leveraged loans selling at bargain prices to package into collateralized loan obligations.

More than 85% of leveraged loans recently traded at a discount to face value, driven by market fears that higher borrowing costs and inflation will strain vulnerable companies.

Lower loan purchase prices can benefit CLO equity by generating extra returns when debt is eventually repaid at face value alongside higher interest yields.