Tariffs Begin to Impact the CLO Market

Large sales in the CLO sector have caused the risk premiums on top-rated CLOs to increase by 10 basis points. Other smaller, and lower rated CLO-focused ETFs have also reported net outflows. According to Bloomberg, the inherent credit risk of CLOs and their floating rate structure have made them more susceptible to current market volatility—including tariffs—as market participants demand more compensation to take on risk. 

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