Insurance companies helped fuel the boom in a corner of the debt market that sliced and diced risky corporate loans. Those bets are now starting to hurt, crimping a key source of financing for Wall Street’s deal-making machine.

Collateralised loan obligations, or CLOs, are investment pools that gather together debt from hundreds of companies. They transform these risky, but diverse sets of loans into highly rated, safe investments, with yields higher than government and corporate bonds.