KBRA Releases Research – Structured Credit Trend Watch: CLO Issuance in Bloom—First Quarter Record for Middle Market

Collateralized loan obligation (CLO) issuance has blossomed in the first quarter (Q1) of 2024 despite a higher for longer interest rate environment. Leveraged loan volume and refinancing activity is up significantly year-over-year (YoY), and structured credit transactions, including broadly syndicated loan and middle market CLO deals, had a tremendous first quarter, with the latter experiencing a record for the period. Nearly $50 billion in total issuance volume was recorded through Q1 for a 40% increase YoY. Market participants have admittedly become more positive on the leveraged finance market versus one year ago, when turmoil in the regional banking industry introduced increased volatility and uncertainty across the financial system. While underlying borrowers are seeing reduced cash generation as a function of higher costs, they have (broadly) been able to navigate a challenging period to maintain margins. That said, defaults have ticked up.

In this report, we provide an overview of the overall structured credit market, including new issue deal volume, benchmark spread levels, notable transactions, and other trends through Q1 2024. In addition, we provide a recap of KBRA’s 2024 rating and surveillance activity.

Click here to view the report.

About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

Doc ID: 1004049

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