Hardman & Co Research: Re-Set, Re-Fi, Re-Light my Fire

In this note, we explore how favourable market conditions mean that CLO vehicles can re-finance debt cheaply, thus enhancing the value of Volta's equity positions, which have been increased substantially in recent years. We show the impact on Volta's CLO debt portfolio and the wider loan market, and what this means for new investment returns. The key message is that the favourable conditions are expected to lift returns by 1%-1.5% p.a. for several years. Volta is benefiting from the unexpectedly low levels of defaults. Despite this favourable outlook, Volta still trades at a 15% discount to NAV, albeit down from March 2020 highs.

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