Kieran Goodwin of Saba Capital compares current credit market conditions to historical correlation dislocations, explaining how concentrated software loan distress disproportionately impairs CLO first-loss equity tranches.
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“It reminds me today where you just had one or two sectors having a lot of stress like we have today and the SAS with respect to levered loans, and we're seeing it in CLO equity has way underperformed. The relative loan market, because all of the damage has been in one sector is the first loss, the equity piece. You're getting the brunt of that.”
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