Tight spreads on collateralized loan obligations (CLOs) reflect significant demand for the floating-rate debt from investors, but numerous CLO managers who typically issue several transactions annually have yet to issue deals this year. The number of new entrants, however, has entered record territory.
"Something like 30 to 35 managers that issued last year haven't issued this year," said John Kerschner, global head of securitized products at Janus Henderson at a recent media briefing.
He added that third-tier managers who might issue once a year are not the names missing in action in 2026. Instead, it is the major players that normally issue anywhere between three and six CLOs a year. He said their reluctance stems in part from the overall arbitrage available to CLO equity investors, which is poor now because CCC-bucket leveraged loans are currently trading very wide, whereas spreads on the top-quality loans they like to buy are relatively tight.
It's very hard to go out and market CLO equity at high single-digit returns.
As a result, he said, CLO managers who have not raised their own equity funds are finding it difficult to find third-party equity investors.
"It's very hard to go out and market CLO equity at high single-digit returns," since the risk-adjusted returns are unattractive, Kerschner said. "Some managers are still issuing because they have a captive equity fund and they're making money from the fees."
Credit market data and analysis firm Octus found 34 managers that had priced at least one deal, including refinancings and resets, between 2020 and 2025 that had not yet completed a deal in 2026. Some, such as AXA IM, PIMCO and Rockford Tower issue regularly, but several others on the list, said Hugh Minch, managing editor of Structured Finance Insights at Octus, are infrequent issuers.
He pointed to Macquarie, Stepstone and Symetra Investment as examples of firms that issued just one or two CLOs in the first half of 2025 and may issue another one later this year.
"It is possible that limited access to equity capital could be why some managers take longer to scale than others," Minch said.
He added that acquisitions of CLO issuers by other firms, such as AXA IM's acquisition by BNP Paribas and Bardin Hill's by Man Group, may also be inhibiting issuance, and some managers facing elevated personnel turnover may be out of the market temporarily.
The expected surge
Despite those challenges, however, 2026 appears likely to see a surge of new issuers in the U.S. market and especially in Europe's. So far this year, Octus has identified 14 managers in various stages of approaching the U.S. market with a deal but have yet to price one. Also, 19 firms are looking to enter the European market—an impressive number given that the European CLO market is a fraction of the U.S. market's size.
While not all those potential issuers may succeed this year, in 2025 there were 12 new entrants in the U.S., and four entered the European market, according to Octus, and in 2024 there were just three in the U.S. and three in Europe.
Speculation that interest rates may stay high for longer or even increase may be one factor prompting interest in the floating-rate CLO market, Minch said, and wider liability spreads in Europe due to the smaller, clubbier investment base have provided more attractive arbitrage for equity investors.
"Also, there's perceived to be less tail risk for European CLOs at the moment, providing a more attractive outlook for equity because the default-rate forecast is lower," Minch said.
