Record-breaking growth: What drove CLO issuance surges in 2024

CLO issuance surged in 2024, with record-breaking volumes in both the U.S. and European markets. The CLO market in the U.S. has seen over $451.27 billion total issuance in 2024, including $193.18 billion in new issuance, surpassing the previous record of $191 billion in new issuance set in 2021, representing a significant increase from the previous year.

Areas of growth

The European CLO market has also seen substantial growth, with 80 new issuances totaling EUR33.9 billion by September 2024, nearly doubling the EUR17.1 billion issued in the same period of 2023.

Private credit CLOs have emerged as a significant trend, accounting for 19.8% of total CLO new issue volume in the U.S. as of May 2024. This segment has attracted increasing interest from traditional CLO investors, including banks, asset managers, insurance companies, and family offices.

Driving factors for growth

The growth in CLO issuance has been driven by strong investor demand, particularly for triple-A rated tranches. This demand has kept spreads consistent for top-rated tranches while pushing the market wider for mezzanine tranches.

Another trend is the entry of new players into the CLO market, especially in the private credit space. Established firms like Ares Management, KKR, CIFC Asset Management, HPS Investment Partners, and PGIM have launched or are exploring private credit CLO offerings.

Overall, the CLO market in 2024 was characterized by record-breaking issuance volumes, the growing importance of private credit CLOs, and the entry of new issuers, reflecting the continued evolution and expansion of this market segment.

Leaders in the CLO space expect that this upward trajectory will increase in 2025 across both issuance dynamics and spread trajectory, identifying asset-sourcing for U.S.-issued CLOs as a key challenge.