(Bloomberg) -- The starting gun has officially fired in the race to launch the first private credit exchange-traded fund.
An application for the BondBloxx Private Credit CLO ETF landed with regulators on Thursday afternoon, filings show. Subject to regulatory approval, the proposed fund would invest at least 80% of its assets in collateralized loan obligations, which will be backed by a pool of loans made to private companies.
The BondBloxx filing lands just two days after Apollo Global Management Inc. and State Street Corp. submitted plans for a fund that will include private credit. Demand from retail investors for private securities has boomed alongside the industry itself, with private markets now worth more than $13 trillion. That has investment giants such as BlackRock Inc. and Invesco Ltd. looking for avenues to provide such exposure — a quest that will "absolutely" generate many more ETF filings, according to Todd Sohn of Strategas.
"The 'private label' marketing war has commenced," said Sohn, ETF strategist at Strategas. "Some of the exposures will be attractive, interesting solutions. Others will probably be gimmicky."
BondBloxx is looking to tap into an already rapidly growing corner of the nearly $10 trillion ETF universe. ETFs holding CLOs, which are bonds backed by leveraged loans that pay floating rates, already command more than $15 billion after the first such fund launched roughly four years ago. The arena is lead by explosive growth in the $12 billion Janus Henderson AAA CLO ETF (ticker JAAA).
So-called private credit CLOs — similar to middle-market CLOs — are heating up as well. Roughly $25 billion of the more than $130 billion of new CLO issuance this year has been in such deals, according to data compiled by Bloomberg.
Tickers and fees are not yet listed for the BondBloxx fund.
--With assistance from Charles Williams.
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