Wednesday, 24 July 2024 08:19

CLOs Have Record Year

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Middle-market collateralized loan obligations (CLOs) are gaining traction, driven by increased direct lending and investor interest, and are poised to surpass broadly syndicated CLOs. In 2023, middle-market CLO issuance reached $27.1 billion, capturing a record 23.4% of the US market.

 

A study by S&P Global Market Intelligence and Creditflux explores how CLO managers are adapting to this growth and managing risks, highlighting challenges like limited financial disclosures. 

 

S&P Global Ratings predicts that default rates on leveraged loans could rise from 1.9% in October 2023 to 3% by September 2024, underscoring the need for effective risk management. The research also examines how managers are incorporating ESG factors to meet regulatory and investor expectations.


Finsum: CLOs seem like a natural place for ESG factors to gain traction. 

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