European collateralized loan obligations have little to cheer about Moody’s Investors Service’s announcement that changes in how it rates CLOs will result in upgrades and result in better perception of their creditworthiness. CLOs in Europe, for one thing, need to comply with a European Union rule requiring issuers to retain 5% of every deal they sell, and for another, CLO investors face penalties if the deals they hold fail to comply with the rules.

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