When it comes to raising fresh financing for multi-billion dollar buyouts, Wall Street bankers have gotten a significant boost this year from a pivotal sector of the leveraged loan universe. U.S. collateralized loan obligations (CLO) have amassed a record-breaking start to the year, with the figures exceeding $32.7 billion so far, as per information from Bank of America research.
This striking rise in CLO sales has outdone the previous record of $24.6 billion set in 2021. Bankers will certainly find relief from this buoyant performance, particularly following the comparatively dismal year of 2023. With these figures, Wall Street is now in a strong position to compete with private credit rivals, to raise new financing for substantial buyouts.
Meanwhile, the surge in CLO issuance isn’t isolated to the U.S. European markets have also witnessed a brisk pace in CLO issuance, tallying €5.1 billion ($5.5 billion) by February 26th this year. The rapid growth in CLO deals represents a bright start to 2024, deriving from the robust appetite for leveraged loans. The trend is so prevalent and favourable that Wall Street analysts have begun upgrading their CLO issuance forecasts.
Given the apparent market demand and favourable conditions, it is clear that CLOs have emerged as a potent tool, not only for financiers but also for those involved in legal professions dealing with securitization. This uptick should offer promising prospects for lawyers specialising in leveraged loan deals, CLO issuance, securitisation specialists and, of course, Wall Street bankers.