The collateralised loan obligation (CLO) market’s stellar growth trajectory in 2024 is continuing into 2025, according to Kartesia’s analysis of the latest data.
The private markets specialist’s structured credit monthly update noted that CLO primary volumes hit a record high of €50.2bn in 2024, beating the previous record high of €38.7bn in 2021.
Read more: Private credit CLOs in the US could overtake BSL CLOs
2024’s volumes were almost double the €26.1bn of new issue volumes recorded in 2023.
Meanwhile, total returns last year came in at nine per cent, 12.7 per cent and 21 per cent for BBB, BB and B tranches, respectively.
2025 data indicates that the CLO market is off to a strong start, with €3.1bn of new issue volumes in January. This compares to €2.1bn of primary volumes in January last year.
“Discussions over the holidays indicated that most market participants anticipated a swift start to 2025, and this has indeed materialised,” said Michael Htun, head of CLOs at Kartesia, and Panagiotis Dounavis, structured credit manager at Kartesia.
“Year-to-date new issue and reset volumes have already reached €5.5bn, marking a 258 per cent increase compared to 2024. Notably, there is continued robust demand across the capital structure, with spreads significantly tighter already this year.”
Kartesia’s analysis noted that the loan market has continued to strengthen, with spreads tightening and prices rallying.
The authors said that more than half of the loan universe within CLOs is now trading above par, presenting opportunities for refinancing at lower costs.
Kartesia is not the only firm predicting a CLO boom this year after a record 2024. S&P Global Ratings is predicting record US private credit and mid-market CLO issuance in 2025.
And new analysis from Indefi has predicted that European CLO issuances will double to be worth up to €75bn before 2030.
Anticipated base rate cuts, continued tightening in CLO spreads and increasing investor demand for fixed-income securitised products are expected to propel the market in 2025.
There are also hopes that a deregulated US market under President Trump could boost M&A and buy-out activity, creating opportunities for CLOs.
