AGL Credit Management took advantage of historically low liability spreads earlier this year to price what might be a record 10 collateralized loan obligation (CLOs) transactions as of April 10, including four new issues and six resets. Launched in 2019, after incubating in the family office of famed investor Thomas H. Lee (the "L" in AGL), the New York-headquartered firm managed $21 billion in assets across the credit spectrum as of May 1, 2025. The first letters in the acronym represent the Abu Dhabi Investment Authority, which supported AGL's launch, and Peter Gleysteen, the firm's chief executive and investment officer. Gleysteen founded CIFC Asset Management in 2005 and before that was a long-time executive at JP Morgan Chase where he left as chief credit officer.
Wynne Comer, AGL's chief operating officer and a securitization veteran, recently spoke to Asset Securitization Report (ASR) about current issues facing the structured finance market. A pioneer in the market who completed the first-ever tobacco-settlement securitization in November 1999, Comer has been active in the CLO market since 2001, when she moved into Citi's CLO group and later joined
ASR: What prompted AGL to issue so many CLOs this year?
Comer: We saw the tightest AAA spreads since the Great Financial Crisis, right up until the tariff announcement (April 2nd), and that was exciting. We issued our 39th CLO in March at SOFR plus 113 basis points on the AAAs, and consistently aim to price our deals at or near market tights in all market conditions.
ASR: What has happened since then?
Comer: The market is not dramatically wider now. However, it feels dramatically wider because we were at 124 basis points four or five weeks ago, and now some new issue deals are pricing in the 130s and others in the 150s, so somewhere in that range.
If investors want a floating-rate product, loans and CLOs are the easiest and most secure places to buy that.
ASR: What about prices on the loan side?
Comer: Loan prices have firmed up, and while prices are still higher, we haven't seen the same percentage of the market trading above par as we did in the first quarter. If investors want a floating-rate product, loans and CLOs are the easiest and most secure places to buy that. We haven't heard yet of CLO ETFs significantly buying yet, but a number of CLOs are ramping up to issue. Loan desks had gotten very light and now they're rebalancing their books and looking to buy more product.
ASR: Is loan supply an issue?
Comer: There's not a lot of primary issuance to buy now. We've seen $80 billion in new loan supply so far this year—not as much as we had expected, but the secondary market can move quickly. Since the election, issuance has been positive, and we do expect more primary in the near term.
ASR: Why is that?
Comer: We are seeing the primary reopen slowly but surely, with six BSL launches this week, a mix of M&A financings and dividend recaps, and there are another handful of loans in various stages of premarketing. There is still demand from borrowers for M&A financing and to address 2027 and 2028 maturities.
Today, we're feeling pretty good about our companies, and it seems the banks are as well.
ASR: Are you seeing demand across the CLO stack?
Comer: We are. We have been able to issue a higher number of deals than ever before, and at tight levels, which shows there's pretty good demand throughout the stack. When the market is volatile, BBs will widen more than AAAs. But these are proven products. Whether it's crossover buyers coming in from bonds or investment-grade buyers, I don't know exactly. But there's pretty good demand.
ASR: Do you anticipate that demand continuing, given uncertainties in the economic and financial markets?
Comer: In our portfolio, about half of our borrowers have reported, and their EBITDAs are up 8% so far this year and revenues were up 5% in Q4. We're trying to extrapolate into the future. Brian Moynihan recently said that
COVID was a tough time when people didn't know what would happen to the economy and how to forecast defaults and recoveries. In those situations, there's typically less CLO demand, especially lower down the stack. Today, we're feeling pretty good about our companies, and it seems the banks are as well. So, demand should continue; the question is what the fair pricing levels are.
We're always thinking about diversification by industry and within industries.
ASR: How will tariffs impact CLOs?
Comer: That's definitely the topic of the moment. We've been trying to project the effects on our portfolios since October. Right now, the focus is on China, but who knows what it's going to be in the next 90 days. One reason CLOs work is diversification, and that's been the key to our portfolio style since inception. We use something called the 10 Ds—the 10 dimensions—and we're always thinking about diversification by industry and within industries. Would a company making washing machines behave the same way as one running Coke bottling plants?
For that reason, we've increased the stress testing of our portfolios. We've always done it quarterly, and now we're getting the assumptions committee together more frequently to think about the latest news coming out of Washington D.C. and if it makes us think differently.
Until the last month or so, people didn't know if the market would behave differently because ETFs are now such a big part of it, and I think we've seen strong support for ETFs lightening up on their AAAs and mezzanine tranches; there's been an active secondary market that's behaved in a very orderly manner.
ASR: How does AGL handle the new volatility and uncertainty internally?
Comer: We're now at 74 people, up from 50 at the start of 2023, including more analysts, a new head of risk, and a new head of restructuring to help us with liability management exercises (LMEs) and LME strategies, as well as people on the operations side. We've added throughout the firm, and that provides more ballast and expertise to the extent there's unpredictability in the market. It also helped us to do the 10 transactions in Q1.
We're going to do our best to avoid LMEs altogether, but they've become a market reality today.
ASR: LMEs reached record volume last year, but the disparities between lending groups appear to have lessened. Do you anticipate that continuing?
Comer: Borrowers don't want to develop a reputation that would keep investors away from their new transactions, and I think investors have gotten smart about it and the market is more orderly. So that may not change going forward … it's hard to say.
ASR: Will the Fifth Circuit Court of Appeals' ruling at the end of last year have an impact, forbidding open-market purchases in pursuit of LMEs?
Comer: There are other terms within the credit agreements that would allow similar opportunities. We've been a part of around 12 LMEs, and our average recovery rate is probably 91% or 92%. So, these are not perfect ways to manage your portfolio. We're going to do our best to avoid LMEs altogether, but they've become a market reality today. That's why we hired a full-time distressed debt analyst to make sure that we're providing our investors with all the tools to maximize our investments.
