Cloud 9fin Tranche Talk — CLO investing in a new regime with BlackRock’s Saffet Ozbalci
Oct 14, 2025
Saffet Ozbalci, Global Head of Structured Credit at BlackRock, shares insights on CLO investing amid recent bankruptcies and market shifts. He emphasizes the need for due diligence on managers and discusses the evolving landscape of CLO ETFs, highlighting their growth and retail appeal. Ozbalci explores the challenges of structural innovation and the importance of standardizing documentation to enhance efficiency. He also addresses the impact of monetary policy on ETF flows and playfully reflects on his favorite football team's prospects in the Champions League.
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This Vintage Differs From 2022
- The current equity vintage differs from 2022 because managers cannot source loans at depressed market values today.
- Success hinges on building high-quality, clean portfolios and avoiding market landmines.
Seek Primary For Current Spread Opportunities
- Prefer primary market for spread pick-up when secondary supply is limited and primary offers more deal choice.
- Accept the settlement lag in primary to access varied manager and structure opportunities.
Structures Must Match Investor Duration Needs
- Structural innovation is emerging to match borrower asset duration with liability profiles, exemplified by a 10-year reinvestment deal.
- Different investors want different cashflow profiles, so a single 5-2 structure won't fit all needs.