Egan-Jones Sees CLO Credit Quality Improve Amid Slower Issuance
Event summary
- CLO issuance moderated in June to $42.3 billion across 101 transactions, down from May's $51.5 billion but still below November 2024 peak of $54.6 billion.
- ICE US High Yield Option Adjusted Spread remained near annual lows while CLO weighted average rating scores improved modestly.
- Egan-Jones rated 1,633 CLO transactions as of June 2026, noting stable portfolio characteristics across key credit metrics.
- Asset and tranche coupons declined modestly due to broader market conditions.
The big picture
Egan-Jones' July market update highlights a nuanced CLO landscape where credit quality improvements coexist with slower issuance. The firm's more favorable assessments compared to peers underscore methodological differences that could influence investor strategies. While issuance has moderated from recent highs, stable key credit metrics suggest ongoing resilience in the CLO market.
What we're watching
- Issuance Trends
- Whether the moderation in CLO issuance will persist or rebound as market conditions evolve.
- Credit Spreads
- How historically tight credit spreads may impact future CLO market dynamics and investor behavior.
- Rating Methodology
- The continued divergence between Egan-Jones' ratings and those of peer agencies, and its implications for market perceptions.
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