Cloud 9fin Tranche Talk — Navigating CLO trading technicals with Performance Trust’s Alex Navin
Mar 20, 2026
Alex Navin, Managing Director at Performance Trust and veteran CLO trader and portfolio manager. He discusses rising trading volumes and why AAA liquidity is holding. He compares today’s volatility to past sell-offs. He unpacks BB market bifurcation, selective equity opportunities, vintage and reset risks, and US versus European relative value.
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AAAs Remain Liquid And Resilient
- CLO AAAs have become a go-to liquid product across money managers, insurers and banks, staying resilient despite macro volatility.
- Large sellers can de-risk AAAs quickly and still obtain tight secondary spreads near par, showing strong market depth for seniors.
Vintage And Sector Dynamics Led The Sell-Off
- The current CLO volatility led the broader sell-off and was driven by a vintage effect plus sector-specific re-underwriting, especially around software.
- Earlier easy underwriting (e.g., 2021) left later vintages with weaker credits and compressed equity arbitrage into 2025.
Reunderwrite Software Credits Bottom-Up
- Do re-underwrite credits bottom-up where sector risk matters instead of relying solely on MVOC or manager quality.
- Software is being revisited company-by-company after rapid AI advances (Claude, OpenAI) changed risk assumptions.