‘More stable returns’ – Ethena expands RWA exposure with AAA-rated CLO funds
Ethena protocol has begun expansion to RWA (real-world asset) tokenization to boost yields and decouple from crypto market cycles. On Friday, the firm behind the yield-paying stablecoin $USDe said, The first asset category under evaluation is AAA CLOs, which sit at the top of the capital stack, with a zero default rate at the AAA level across the entire history of the asset class. Source: X Collateralized Loan Obligations (CLOs) are a pool of loans from individual companies handled by asset managers. Think of it as an ETF index tracking different stocks of various companies and offered to investors. But instead of tracking stocks, CLOs track pooled corporate loans. Now, the AAA mark is the highest evaluation score rating firms like Moodys can place on such financial products. The AAA rating means the product has the lowest level of default or high credit quality. Why Ethena is betting on CLOs Beyond credit quality, Ethena is seeking an RWA asset with high liquidity and a low downside profile. According to the team, CLOs, especially the Janus Henderson Anemoy AAA CLO Fund, fit this criteria. Notably, during the financial crisis, like the COVID-19 era and high Fed interest rates, the broader CLO sector only fell 8% and 2%, respectively.