CLO Manager Roundtable – A panel of senior CLO managers discuss how the recent pull back in the leverage loan market should help them create better portfolios.

https://www.youtube.com/watch?v=mk8Ie_Cutno

The following is a summary of 9Fin sponsored CLO Manager Roundtable - Making Sense of Market Volitality.       

• Poo2025 was an excellent year for leverage loan credit quality; aPhowever, tightening loan spreads and high prices made it difficult for CLO managers to create value for their equity investors.

• The recent volatility in the loan markets has provided CLO managers with the opportunity to buy strong names in beaten sectors (software and others) at opportunistic prices improving the funds par balance and WAS.

• Overall leverage loan prices are holding up - with continued strong company fundamentals but some stress in certain pockets - especially software companies.

• Indiscriminate initial selling of all software names created some buying opportunities.

• Even with the recent large M&A activity, demand for new $ loans still outpaces loan supply.

• New CLO issuance market will continue to be muted because loan spreads are still tight and CLO debts spreads have widened out a bit.  Total cost of debt CLO debt is still relatively low – around 165bps.

• CLO equity pricing was down 10% - 15% in 2025.  New issuance expected returns are around 10% - 12%, which is a little better than last year’s expected returns of 8% - 10%.

• CLO equity secondary prices are down and trade with expected returns of over 15%.  Most CLO equity investors are concentrating on secondary purchases. 

• The consensus outlook for 2026 is continued volatility in the leverage loans market that shou;d alway CLO managers to improve WAS and Par.

Leave a comment if you have any questions?