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Shiloh Bates is the Chief Investment Officer of Flat Rock Global, an alternative credit manager with about $1.6 billion in assets under management across three interval funds. Previously, he was a Managing Director at Benefit Street Partners and Head of Structured Products at BDCA Adviser. He is the author of CLO Investing and host of The CLO Investor Podcast.
We discuss how CLOs work, why CLO equity has disappointed over the last two years, how to compare CLO managers, why captive equity funds have hurt the market, what private credit CLOs do differently, and why he sees value in CLO equity and BB notes today.
Learn more about Shiloh and Flat Rock Global:
https://www.linkedin.com/in/shiloh-bates-186ab28/https://flatrockglobal.com
Read Shiloh's book, CLO Investing: With an Emphasis on CLO Equity & BB Notes:
https://www.amazon.com/CLO-Investing-Emphasis-Equity-Notes/dp/1642376566
Listen to The CLO Investor Podcast:
https://podcasts.apple.com/us/podcast/the-clo-investor-podcast/id1738052032
Subscribe to Deepwell: https://deepwellco.substack.com
(00:00) Intro
(01:21) From political science to finance
(04:10) Learning CLOs on day one at First Union
(05:00) How a CLO works like a simplified bank
(07:43) When CLOs were a backwater
(09:11) Equity returns through leverage
(11:38) Why CLO equity has disappointed
(18:32) Six-month call protection, locked financing
(21:29) How to compare CLO managers
(29:02) How CLO equity gets marked daily
(33:00) The problem with captive equity funds
(38:11) What CLO ETFs mean for AAAs
(41:05) Why BDC and interval fund redemptions are rising
(45:32) Private credit CLOs vs broadly syndicated
(49:56) What he's watching into 2027
