A closer look at the equity trash.

Here is a closer. Look at the returns for the equity trash on. The left is the $400. Clo 90% debt 10% Equity the cash flows look as follows.

And investment by the equity holders for 40 million is made at the beginning. They receive 2.05% each year, which is the excess spread and that is calculated on the 360 million of debt that is generating. The return the 7.4 million of cash flows is for each year of the life of the clo and that can vary but here we're showing a nine year CLL at the end of the clo the par value of the loans are repaid but recall that we only leverage 90% of the assets. So the clo is considered to be over collateralized of the total Capital raised only 90% was debt and that is the only portion that needs to be paid back. The remaining 10% is paid directly to the equity holders creating a 47.4 million cash flow in year 9 The irr for this stream is 18% This is how it works in theory, of course, and we're not factoring in admin fees and And fees paid to the collateral managers, there are also many complications to the cash flow modeling such as prepayments and the buying and selling of loans in the portfolio above and below par.