The yields in the European securitised market are compelling and attractive, according to a new report by Sona Asset Management.
In its report, The Investment Case for Europe, the firm said that yields on offer in the European securitised market are “compelling, especially risk-adjusted”, with AAA-rated prime RMBS, CMBS, CLOs, and UK non-prime RMS offering up to five per cent yields currently. This increases to seven per cent for UK non-prime BB-rated CMBS and 10-15 per cent for CLO single-B and equity tranches.
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“Meanwhile, the CLO market continues to go from strength to strength in Europe. Year to date, new issue volumes have already eclipsed €30bn (£26bn) and are 24 per cent ahead of the comparable period last year. Deutsche Bank forecasts full year supply of €50bn, roughly matching the record from 2024,” it added.
“While spreads are currently ~15bp wider in European AAA CLOs currently versus those in the US, spreads have historically been comparable, but generally look more attractive in Europe as quality declines.”
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Overall, the firm said that Europe “now presents a unique case for strategic re-evaluation”, adding that policy momentum is building, and there is a continent-wide push to regain global standing in artificial intelligence.
“We believe these developments signal a region in transition — one that is not merely reforming itself but actively courting capital to drive energy security, technological advancement, and market integration,” it added.
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