Clo Agreement

14 Sep , 2021   David  

According to CLO CMAsFor better or worse, compared to an investment advisory contract for a managed account or an investment management contract for a credit hedge fund or a private equity fund, the security management contract for a CLO is a much more important document, with more detailed and binding provisions on the obligations of the manager, the level of diligence and responsibility of the AIFM, the withdrawal of the AIFM (for a material reason or no reason) and the disclosure of conflicts of interest. Many of these provisions are required not only of investors, but also of credit rating agencies. For example, it is likely that a credit rating agency will insist that the AIFM exercise vigilance that (i) is not less than that exercised by the AIFM itself in the management of comparable assets for itself, related undertakings and third parties, and (ii) no less than that which would be exercised by an institutional manager of international rank in the management of comparable assets. It is not clear how a new DIRECTOR of CLO would experience a standard of care applied by “a world-class institutional manager in the management of comparable assets,” but an investment officer who has worked for a world-class institutional manager and is familiar with the level of diligence used by those managers may be a good place to start. .