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Shiloh Bates

Chief Investment Officer, Flat Rock Global · 1 appearance on the record.

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investorexecutiveauthorhostflatrockglobal.com ↗

At Flat Rock Global, Bates oversees investment strategies focusing on alternative credit, specifically collateralized loan obligation (CLO) equity and mezzanine debt tranches. A structured credit investor and former Managing Director at Benefit Street Partners, he authored CLO Investing and hosts The CLO Investor Podcast.

14statements → 11claims → 10claims resolved → 90%fully supported → 3.79/5average certainty → 1.5/5average debate potential → ≈4.5/5argument clarity, estimated →

9 supported 1 partly supported 0 contradicted 1 not checkable as stated how the 11 claims stand · each chip opens the sources

11 assertions · 2 insights · 1 what if · every statement was checked. The predictions and assertions are the 11 claims: statements the public record can support or contradict. 10 are resolved, and 1 names no date, number or outcome precise enough to check. Everything else (opinions, insights, what ifs, disclosures) can never be settled by the record, so it carries no assessment.

The record, in short

What the tape says about how Shiloh argues and how the claims held up. Everything they said, and everything said about them, is in the tabs below.

Their most notable supported claim

Assertion Supported
CLO equity returns reached the high 20s during the Global Financial Crisis
“And then if you were in contrast, an investor in CLO equity through the financial crisis on a buy and hold basis, a lot of the equity in those deals return high, 20% returns and the debt in the CLOs defaults rarely as well.”
Shiloh Bates Apr 11, 2024 ▶ 6:32 Shiloh Bates – CLO Investing at Flat Rock Global (EP.379)

How they sound: not measured why? →

We measure speaking style by listening to the audio itself, and a fair number needs at least 2,000 words from one person on tape we have measured. There is too little of Shiloh Bates on measured tape to publish a rate. This says nothing about how they speak.

Everything Shiloh Bates said on Capital Allocators that made the record, most notable first. Filter by type, assessment or year in the ledger →

Assertion Supported
CLO equity returns reached the high 20s during the Global Financial Crisis
“And then if you were in contrast, an investor in CLO equity through the financial crisis on a buy and hold basis, a lot of the equity in those deals return high, 20% returns and the debt in the CLOs defaults rarely as well.”
Shiloh Bates Apr 11, 2024 ▶ 6:32 Shiloh Bates – CLO Investing at Flat Rock Global (EP.379)
Assertion Supported
30-year default rate on BB-rated CLO debt tranches is 20 basis points
“If you look back over 30 years, the default rate on CLO double Bs is around 20 basis points.”
Shiloh Bates Apr 11, 2024 ▶ 12:14 Shiloh Bates – CLO Investing at Flat Rock Global (EP.379)
Assertion Supported
BB-rated CLO debt currently yields over 12% with minimal defaults
“Today, because CLO BBs are floating rate, and because the Fed has hiked so much, we're getting yields in the 12% plus area, and defaults have been really, really minimal.”
Shiloh Bates Apr 11, 2024 ▶ 12:41 Shiloh Bates – CLO Investing at Flat Rock Global (EP.379)
Assertion Not checkable as stated
Only about 15 institutional investors provide initial CLO equity
“So I think there's about 15 of us. One of the common jokes in the CLO industry is that you go to CLO conferences, of which there's many, and it's a common theme that, ah, you know, there's new investors coming into the market, and you kind of always hear this,…”
Shiloh Bates Apr 11, 2024 ▶ 20:10 Shiloh Bates – CLO Investing at Flat Rock Global (EP.379)
What-if
AAA CLOs would have buffered banks during the 2023 banking crisis
“If you look at the banking crisis of the spring of last year, look, if banks would have owned AAA rated CLOs instead of some of the bonds that might be in the Bloomberg aggregate bond index, CLO AAAs might've traded to 97 cents on the dollar or something like …”
Shiloh Bates Apr 11, 2024 ▶ 7:09 Shiloh Bates – CLO Investing at Flat Rock Global (EP.379)
Assertion Supported
Only about 6% of CLOs have historically generated a negative IRR
“So by our math, it's about six percent of CLOs that have had negative IRR.”
Shiloh Bates Apr 11, 2024 ▶ 23:10 Shiloh Bates – CLO Investing at Flat Rock Global (EP.379)
Insight
A diversified CLO portfolio requires roughly 20 positions at 5% maximum
“To be diversified in the CLO market, I would say it's something like having max positions of around five percent of the portfolio. Each CLO, again, is going to have 200 or 300 different loans in it. You would not need a hundred CLO equity tranches to be divers…”
Shiloh Bates Apr 11, 2024 ▶ 32:17 Shiloh Bates – CLO Investing at Flat Rock Global (EP.379)
Assertion Supported
CLO AUM grew from $6 billion in 1998 to $1 trillion today
“So there was basically about six billion in AUM when I joined. And there was six different CLO managers. And today there's really over a trillion in CLO AUM and about a hundred different active CLO managers.”
Shiloh Bates Apr 11, 2024 ▶ 3:45 Shiloh Bates – CLO Investing at Flat Rock Global (EP.379)
Assertion Supported
The CLO equity tranche represents a $100 billion asset class
“Of a trillion of CLO AUM, the CLO equity tranche is about 10% of the CLO's financing. So it's a hundred billion asset class for CLO equity in particular.”
Shiloh Bates Apr 11, 2024 ▶ 4:07 Shiloh Bates – CLO Investing at Flat Rock Global (EP.379)
Assertion Partly supported
30-year average annual default rate on CLO loans is about 2%
“You can look back 30 years, and by our estimate, the default rate in CLOs is about two percent.”
Shiloh Bates Apr 11, 2024 ▶ 11:15 Shiloh Bates – CLO Investing at Flat Rock Global (EP.379)
Assertion Supported
CLO managers typically earn 30 to 50 basis points in fees
“They earn, call it, 30 to 50 basis points to put together the initial loan portfolio to keep the CLO fully invested.”
Shiloh Bates Apr 11, 2024 ▶ 16:08 Shiloh Bates – CLO Investing at Flat Rock Global (EP.379)
Assertion Supported
Broadly syndicated loans comprise 90% of the CLO market
“The 90% of the CLO market is broadly syndicated CLOs. So if you look in there, you're going to find companies who borrow a billion dollars and up basically.”
Shiloh Bates Apr 11, 2024 ▶ 30:57 Shiloh Bates – CLO Investing at Flat Rock Global (EP.379)
Assertion Supported
Asurion is the single largest loan held across CLO portfolios
“Asurion is the largest loan in CLOs today.”
Shiloh Bates Apr 11, 2024 ▶ 32:38 Shiloh Bates – CLO Investing at Flat Rock Global (EP.379)
Insight
CLO equity liquidations often return just 40 to 50 cents on the dollar
“There's no par payout at the end. A lot of times you're getting back 40 cents, 50 cents on the dollar. Now, over the eight-year life of the CLO, you've got these very large distributions along the way. Hopefully it nets to a nice return for you, but you don't …”
Shiloh Bates Apr 11, 2024 ▶ 38:16 Shiloh Bates – CLO Investing at Flat Rock Global (EP.379)

Appearances (1)

EpisodeDateSpeaking time
Shiloh Bates – CLO Investing at Flat Rock Global (EP.379) Apr 11, 2024 39m
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