medium · Asset-Backed Securities
In a CLO, what is the 'Reinvestment Period'?
- The phase where all excess spread is 'reinvested' into a reserve account until it reaches 5% of the deal size.
- A period (typically 4-5 years) during which the manager can use principal proceeds from loan repayments to buy new loans for the portfolio.
- The time at the beginning of the deal where the manager must find all the initial loans to fill the trust.
- A window after the deal matures where bondholders can choose to reinvest their par return back into a new deal from the same sponsor.
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