easy · Asset-Backed Securities
A CLO is within its reinvestment period, a portfolio loan prepays, and all applicable reinvestment conditions are satisfied.
What will the manager typically do with the principal proceeds?
- Apply the entire amount immediately to pay down the AAA notes despite the satisfied reinvestment conditions
- Distribute the entire amount directly to equity ahead of the debt waterfall and required transaction uses
- Leave the full amount uninvested until deal maturity even though eligible replacement assets are available
- Purchase eligible replacement leveraged loans to maintain the collateral pool
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