CLOs Fight Back Against Hedge Funds

The video discusses the increasing intensity of battles between lenders as companies restructure due to COVID-19 impacts. Hedge funds are exploiting weaknesses in Cielo's strategies, prompting Cielo to amend old agreements to attract fresh cash. The leveraged loan market has grown, making it a target for hedge funds. Poor documentation and covenants have exacerbated the situation, allowing hedge funds to prioritize certain lenders. The high default rates are causing significant pain for equity investors, and recovery depends on countering hedge fund maneuvers effectively.

What factors have contributed to the increase in bitter fights among lenders?

How have hedge funds started to take advantage of the current market situation?

What limitations do lenders face in the current restructuring environment?

In what ways are lenders attempting to fight back against hedge fund maneuvers?

What impact does the expected default rate have on investors in the Cielo market?