Collateralised loan obligations, known as CLOs, are financial products structured by banks and sold to investors. The assets underlying CLOs are predominantly leveraged loans and are managed by an asset manager. Each CLO is structured as a series of tranches of notes, with different levels of seniority. The tranches of debt typically pay a floating-rate coupon. Holders of the subordinated notes - the first-loss position within the CLO structure - receive cash-on-cash quarterly distributions. CLOs are one of the largest asset classes within securitised products. In the US, broadly-syndicated loan CLOs (BSL CLOs) co-exist with Middle-Market CLOs (MM CLOs). The Europe CLO market consists almost exclusively of BSL CLOs - usually referred to as "leveraged loan CLOs".
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