Our earlier flow analyses noted the influx of new CLO managers entering the European market, whether from the US or CLO-adjacent spaces. New entrants, both those entering organically or through acquisition, might need fewer assets and managers to launch than their US peers, but they also will have to compete harder given the current dearth of supply.

“Performance is important: debut managers stick to more balanced and defensive portfolio construction, but unannounced ‘style drift’ by existing managers can negatively impact performance and future fundraising” noted Paul Roos, Partner and Head of Structured Credit at Whitebox Advisors. With around 70 managers already in Europe (and an anticipated 10 to 20 new ones over the coming year), some consolidation is likely. But, he added, today’s challenging environment allows great managers – both seasoned and new – to shine. Leveraged loans might not be in plentiful supply, but buyers remain discerning and create a ‘credit-pickers’ market’.

Overall, “underlying assets have been resilient”, said Brendan Condon, Head of European CLO Structuring at Deutsche Bank. Collateral performance in the private credit/mid-market (PC/MM) space has held up well too. “There have been no big blow-ups within CLOs, although this could be due to the usual delays in quarterly reporting and more generally due to the market going through ‘a price-discovery phase’,” added Kieran Page, Head of Structured Credit & Mortgages at Legal & General Institutional Retirement. 

Given credit committee concerns, some banks are reportedly focusing on existing borrowers. Such lender-borrower familiarity is helpful, but already commonplace in PC/MM, where more direct dialogue helps underwriting, reporting and, occasionally, work-outs, reported panellists. Lender caution and adaptation of legal structures and documentation aside, funding for the PC/MM space is available but more limited – and over the past five years, BSL has disappointed compared to PC/MM.

Panellists concluded that the CLO market has been so resilient due to four key factors:

The calibre of CLOs’ underlying collateral: in 25 years of returns for European LBO loans, only 2008 and 2022 had negative performances.
The calibre of CLO managers: although after such a historically benign environment, there is evidence of more variance in European manager results. This will lead to some ‘tiering’, or further delineation of CLO managers according to their experience, assets managed, and performance – and thus their fees and spreads commanded when pricing.
‘Captives’ (whereby an investor signs up for several deals with one particular CLO manager) provide a pipeline of demand. Investors clearly favour the access to deals captives provide, their returns, and other features, otherwise there would not be new ones appearing constantly.
The overall structure of CLOs: they are ‘like a bank but an inverse one, with locked-in funding for 12 years up-front’. Specifically, their structure enables investors to choose their ideal instrument: for some, buying senior secured debt issued by well-performing corporates at just shy of par in the mid-90s is a ‘screaming buy’ that generates attractive income. For others preferring the other of the capital stack, buying at a deep discount and capturing the pull-to-par can also appeal.

Given these four factors, the CLO success story should continue, and weather the current turbulence.

The Creditflux CLO Symposium 2026 took place from 20–21 April 2026 in London

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