Apollo switches retention route in forthcoming European CLO

By Sayed Kadiri

Thursday, May 22, 2014

Apollo Credit Management is taking a different tack to European CLO issuance in its forthcoming deal than the one it used before

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TAGS: Risk retention Apollo

Comment by: Anonymous. Posted 9 years ago [2014-05-23 21:54:25]

Thanks, Anonymous II - I appreciate the correction. It looks like I lose the bet.

Comment by: Anonymous. Posted 9 years ago [2014-05-23 12:57:15]

Actually Anonymous (below), the regulators did see "skin" being leveraged. See the RTS on risk retention which has always contemplated the retention being used as collateral for secured funding purposes as long as it doesn't transfer the credit risk of the retention to a third party (which full recourse lending does not). This has been explicitly the case since day 1.

Comment by: Anonymous. Posted 9 years ago [2014-05-23 00:23:11]

Giving 75% advance rate funding to a CLO manager buying a vertical strip is certainly reasonably low risk to the lender - it's arguably triple-A without considering recourse to the manager. But does it really feel like skin-in-the-game for the manager? Shouldn't the "skin" be unleveraged? I'll bet the regulators didn't see managers leveraging the skin.

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