The Iran-U.S. conflict, which began in February, continues to impact the U.S. collateralized loan obligation (CLO) market, as April issuance slowed for both broadly syndicated loans (BSL) and middle market (MM) products.
Professionals brought nine new BSL transactions to market totaling just under $5 billion, with a spread of 127 basis points over the Secured Overnight Financing Rate (SOFR) on the AAA notes. That spread was six bps wider than the prior month, according to Fitch Ratings' CLO industry monitor for April 2026.
Among new U.S. middle-market CLOs, four deals priced for just over $1 billion, with a AAA average spread of SOFR +158 bps, according to Fitch's April update.
Those spreads represented widening for the second month, the rating agency said.
For year-to-date through April 30, the market priced 258 CLOs backed by BSLs, representing $114.5 billion, and 41 MM deals totaling $19.3 billion. On a year-over-year basis, those production numbers represent declines in volume of 24.2% and 38.7%, respectively.
The market's softness did not impact credit quality, however, Fitch said. Newer deals are of higher credit quality, and existing portfolio managers are taking steps to lower the risk in those pools. The rating agency noted that its weighted average rating factor (WARF) averaged 23.3 in April for reinvesting Fitch-rated U.S. broadly syndicated loan deals, up from 24.2, Fitch said.
"Average target portfolio par losses for reinvesting CLOs remained flat at 0.5% in April 2026, the same as the previous month," according to the rating agency. Still, this was higher than the 0.3% average loss seen in the same period the previous year.
