Article/Intelligence
Correction: Private Credit CLO Reinvestment Periods Set to Increase to Five Years
A previous version of this story stated that SMBC is marketing a new CLO for Churchill Asset Management. This statement was incorrect and has been removed.
Private credit CLO reinvestment periods are set to increase to five years after multiple transactions launched recently with longer duration.
Sources say that Blue Owl has a five-year new issue in the market and that Golub Capital is working on a reset with five years of reinvestment capacity. All three transactions are structured with a two-year call lock, sources say. Prior to these deals a market-standard private credit CLO had a four-year reinvestment period.
The longer reinvestment periods would lead private credit CLO structures to converge with their broadly syndicated cousins. 2024 has seen the BSL and private credit markets converge in various ways: companies are increasingly selective about which market to issue into depending on terms.
Pricing has also converged throughout the year. Golub priced another private credit CLO this week – Golub Capital Partners CLO 73(M) – with a triple-A spread of SOFR+ 162 bps, which is 2 bps tight of the senior triple-A notes on BSL deal Hayfin US CLO XV, which priced on May 10.
The tightening of the basis between private credit and broadly syndicated CLO tranches has led some investors to question whether they are getting compensated for taking on the extra risk.
Private credit is generally thought to price in an illiquidity premium, although one issuer told Reorg that this idea is often exaggerated since most tranche investors in private credit deals tend to hold to maturity.
According to Reorg’s data, a select group of private credit CLOs – then typically known as middle market CLOs – priced running five-year reinvestment periods in 2018. That vintage coincided with the tights of last decade’s credit cycle.
This publication has been prepared by Octus, Inc. or one of its affiliates (collectively, "Octus") and is being provided to the recipient in connection with a subscription to one or more Octus products. Recipient’s use of the Octus platform is subject to Octus Terms of Use or the user agreement pursuant to which the recipient has access to the platform (the “Applicable Terms”). The recipient of this publication may not redistribute or republish any portion of the information contained herein other than with Octus express written consent or in accordance with the Applicable Terms. The information in this publication is for general informational purposes only and should not be construed as legal, investment, accounting or other professional advice on any subject matter or as a substitute for such advice. The recipient of this publication must comply with all applicable laws, including laws regarding the purchase and sale of securities. Octus obtains information from a wide variety of sources, which it believes to be reliable, but Octus does not make any representation, warranty, or certification as to the materiality or public availability of the information in this publication or that such information is accurate, complete, comprehensive or fit for a particular purpose. Recipients must make their own decisions about investment strategies or securities mentioned in this publication. Octus and its officers, directors, partners and employees expressly disclaim all liability relating to or arising from actions taken or not taken based on any or all of the information contained in this publication. © 2025 Octus. All rights reserved. Octus(TM) and the Octus logo are trademarks of Octus Intelligence, Inc.