Pros And Cons Of Collateralized Loan Obligations

As the economy improves, investors have shifted to riskier investments, such as stocks and junk bonds. Lately, more have taken an interest in so-called leveraged loans, or those made by banks to companies with lower credit ratings. These loans can have sizable yields, a nice feature in a world where Treasurys and investment-grade bonds offer skimpy interest rates. Lately, more of these loans have been placed in vehicles called collateralized loan obligations.