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Fair Oaks Reflections – October 2018

CLO Equity: A Good Time to Invest?

Challenging credit fundamentals, tight credit spreads and volatility can, unsurprisingly, be reasons to justify delaying investment decisions until the market corrects. On the other hand, the opportunity cost of holding cash is high and it is difficult to time investment decisions perfectly, not just in the sense of identifying the right time to invest but also ensuring decisions are made in a timely manner at a time of high volatility. Fair Oaks believes that CLO equity provides a compelling solution to the aforementioned challenges, particularly for investors with a medium-term time horizon.

In addition to offering an attractive return under sensible default and reinvestment assumptions (we estimate that the base arbitrage for a typical CLO is in the 10–12% range), there are unique characteristics of CLO equity that significantly mitigate concerns of weak credit fundamentals and tight credit spreads while CLO equity also has an unusual positive exposure to volatility. The historical return experience for CLOs, particularly for CLOs issued just before the financial crisis, further makes the case for investors to consider the asset class in current market conditions.

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“It has come to our attention that an organisation called Fair-OaksCrypto, which appears to be operating from France, is using the Fair Oaks name and its prior address (67-68 Jermyn Street, London SW1Y 6NY, London) on its website

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If you receive a call from the telephone number +33 9 70 73 43 94 or an email from the domain then please be aware such communication has not been made by Fair Oaks Capital Limited or any other entity within the Fair Oaks group.

Fair Oaks Capital Limited has no offices or joint venture partners in France. If you have any questions or concerns regarding this matter, please contact Fair Oaks Investor Relations on or +44 (0)20 3034 0400.”

Il a été porté à notre attention qu’une organisation portant le nom de Fair-OaksCrypto et semblant avoir son siège social en France, se sert du nom de Fair Oaks et de l’adresse précédente de Fair Oaks (67-68 Jermyn Street, Londres, SW1Y 6NY) sur son site web

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Si vous recevez un appel du numéro téléphonique +33 9 70 73 43 94 ou un courriel émanant de la domaine, nous vous mettons en garde qu’une telle communication ne provient pas de Fair Oaks Capital Limited ni d’aucune autre entité se trouvant au sein du groupe Fair Oaks.

Fair Oaks Capital Limited n’a ni de bureau ni de partenaire en France. Si vous avez des questions ou des soucis à cet égard, vous êtes priés de contacter Fair Oaks Investor Relations à ou +44 (0)20 3034 0400.”