Leveraged Finance & CLO Essentials

Private Credit & Middle Market CLOs

Private Credit And Middle-Market CLO Quarterly: Not A Sunset, Just An Eclipse
(Q2 2024)

Middle-market CLO issuance has been very robust this year, although it hasn’t (yet) reached the 35% of total U.S. CLO issuance that many in the market had been expecting late last year, largely because broadly syndicated loan (BSL) CLO issuance has been so strong. As of April 15th, middle-market CLO issuance has been $10.49 billion across 21 transactions, up 51.4% over the same period last year. Meanwhile, BSL CLO issuance is up 55.8% year over year, and middle-market CLOs have made up 18.3% of total issuance in 2024 so far.

We expect the pace of BSL CLO issuance will taper off at some point this year and the proportion of middle-market CLOs issued will grow.

U.S. CLOs & Leverage Finance

U.S. BSL CLO And Leveraged Finance Quarterly: High Capital Costs Limit Broad-Based Improvement (Q2 2024)

This report gives a detailed summary of what's expected for the U.S. broadly syndicated collateralized loan obligation and leveraged finance space in second-quarter 2024.
Despite a positive economic outlook, high interest rates and capital costs hinder credit quality in our speculative grade portfolio. Although there is an ongoing overall earnings growth and improved cash flow generation, interest coverage deficits are a key pressure point for about 20% of issuers. Year to date (though April), $66.17 billion of new U.S. collateralized loan obligations (CLOs) have been issued per Pitchbook LCD, making this the busiest start to the year in the CLO 2.0 era. We expect the high issuance volume to taper off at some point based on our view that there isn’t enough corporate loan supply being created from mergers and acquisitions and leveraged buyouts to continue new issue CLO creation at this pace.

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Europe CLOs & Leverage Finance

CLO Pulse Q1 2024: High Leverage Affects Interest Coverage Ratios In European Obligors

European collateral loan obligations (CLOs) typically benefit from portfolio diversification, from both an issuer and a sector perspective.

In this publication, we examine the aggregate asset quality held by European CLOs, observed through key credit metrics and consolidated by S&P Global Ratings' CLO industry sectors. Specifically, this edition of sector average metrics for European CLO assets focuses on loans issued by 633 corporate issuers, which represents over 95% of the assets under management (AUM) held in reinvesting European CLOs rated by S&P Global Ratings as reported up to Dec. 31, 2023, in the first quarter of 2024.

Relevant Insights

Explore more of our CLO & Leveraged Finance content:

• – Global Leveraged Finance Handbook
• – 2022 Annual U.S. Corporate Default & Rating Transition Study
• – 2022 Annual Global Leveraged Loan CLO Default And Rating Transition Study
• – 2022 Annual European Corporate Default And Rating Transition Study
– Leveraged Finance: Fifth Annual Study Of EBITDA Addbacks Finds Management Continues To Regularly Miss Projections