medium · Asset-Backed Securities
If a CLO manager is operating during the reinvestment period and the portfolio is failing its Diversity Score test, what is the 'Maintain or Improve' rule's specific requirement for a new trade?
- The new trade must increase the Diversity Score by at least 5 points.
- The trade is only permitted if it also improves the WARF and WAS tests simultaneously.
- The manager must stop trading obligors in industries where the concentration is already high.
- The new trade must not result in a Diversity Score that is lower than the score immediately prior to the trade.
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