US CLO overlap is more than one-third, says Moody's

One way to get distinct portfolios was to delve into the middle market, which clo investors hate, so managers were left with...buying Idearc, which is non-accrual and 42 bid right now.

This shouldn't be a surprise to most CLO investors who read the monthly trustee reports or looked at sample portfolios before investing. The only way a CLO manager could get collateral back in the heyday was to place large positions. Managers who placed small orders would often get bagled and if they really wanted the paper had to buy it at above par from a hedge fund that was flipping.

It's great they made this comment now in late 2009 after investors have experienced downgrades and losses.