CLOs

Part of the yield engine. Approved by governance; discussion and analysis on Noon’s Governance Forum.

What are CLOs

A Collateralised Loan Obligation (CLO) is a security backed by a pool of corporate loans, structured into tranches by seniority.

In the world of coporate debt, the senior (AAA-rated) tranches are paid first and absorb losses last, which is what makes them suitable for a stability-focused reserve.

Noon's CLO exposure targets these senior tranches.

Noon's analysis evaluated Janus Henderson's JAAA, an ETF holding AAA-rated CLO tranches.

Launched in October 2020, JAAA has grown to become the largest CLO ETF by assets under management (AUM), surpassing $20 billion as of early 2025.

Noon Deployment Analysis: Summary

Return generation mechanism

AAA CLO tranches yield more than comparably rated bonds largely because of complexity and liquidity premia rather than additional credit risk, floating-rate coupons that track short-term rates, and the structural protection of sitting senior in the capital stack.

The strategy also plays a complementary role in the basket: funding-rate arbitrage earns most when markets are greedy, while structured credit earns steadily when markets are cautious. Holding both smooths the basket's return across regimes.

Documents

• A full risk assessment can be found archived in Noon's Governance Forum

• Primer: CLO Primer