Hardman & Co Research: Volta Finance Limited (VTAS): An easy guide to the benefits of CLOs

Hardman Co Research:

Volta Finance Limited (VTAS): An easy guide to the benefits of CLOs

The industry-specific terminology associated with CLOs can give the impression of a complexity to the product that belies reality, and, in our view, is unhelpful to the Volta investment case. Accordingly, in this note, we give investors a simple guide to what CLOs are, the benefits they provide, and how Volta is taking the market opportunities. The core of CLOs is uncomplicated cashflows. They are just a pooling of loans into a vehicle, which funds itself by issuing a range of debt and equity. The pool has diversification and credit-enhancement benefits, which result in investors in debt getting a better-than-average risk/return, and investors in equity getting double-digit returns.

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About Hardman Co: Hardman Research Ltd, trading as Hardman Co, is an appointed representative of Capital Markets Strategy Ltd and is authorised and regulated by the Financial Conduct Authority; our FCA registration number is 600843. Hardman Research Ltd is registered at Companies House with number 8256259. Attention is drawn to the important disclaimers at the end of the report.