Downgrades in Leverage Market Will Likely Cause Defaults to Increase, Says PineBridge's Kollmorgen

Downgrades in Leverage Market Will Likely Cause Defaults to Increase, Says PineBridge's Kollmorgen

Assessment

Interactive Video

Business

University

Hard

Created by

Quizizz Content

FREE Resource

The video discusses the current market opportunities and risks, particularly in the leveraged loan market, due to COVID-19. It highlights the response of rating agencies, which have been quick to downgrade loans, impacting CLOs. The video compares the current situation to the 2008 financial crisis, noting that CLOs have shown resilience due to structural enhancements and better collateral. The importance of understanding underlying credits in portfolios is emphasized for investors.

Read more

5 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is one of the main reasons for the downgrades in the leveraged loan market?

Rising inflation

New government regulations

Impact of COVID-19 on the economy

Increased interest rates

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How did CLOs perform during the financial crisis of 2008?

They remained largely unscathed

They suffered significant losses

They were completely restructured

They were banned by regulators

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is one of the structural improvements in CLOs since the financial crisis?

Elimination of high-yield collateral

Reduced number of tranches

Increased levels of subordination

Decreased levels of subordination

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the significance of understanding underlying credits in a CLO portfolio?

It is crucial for assessing below investment-grade tranches

It helps in predicting market trends

It determines the interest rates

It is required for regulatory compliance

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What role did the Volcker Rule play in the changes to CLOs?

It reduced the interest rates

It eliminated the need for credit analysis

It mandated 100% backing by leveraged loans

It increased the number of tranches