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An introduction to collateralized loan obligations

Seeing Beyond the Complexity

Collateralized loan obligations (CLOs) are robust, opportunity-rich debt instruments that have been around for about 30 years. And while they’re well established, they’re also complex enough that even sophisticated investors may hesitate to dig into the details – and end up avoiding them instead.

CLOs have been gaining wider prominence in markets in recent years, and it’s no surprise why. They offer a compelling combination of above-average yield and potential appreciation. But for many investors, the basics of how they work, the benefits they can provide, and the risks they pose are wrapped in complication. And they’re also often misconstrued by the financial media and some market participants.

Volta Finance Limited (LON:VTA) is a closed-ended limited liability company registered in Guernsey. Volta’s investment objectives are to seek to preserve capital across the credit cycle and to provide a stable stream of income to its Shareholders through dividends that it expects to distribute on a quarterly basis.