CLO Returns Underperforming in 2023, New Issuance Declines

According to an article published by Bloomberg, collateralized loan obligation (CLO) market is facing rising funding costs and lower returns on investments. This has reduced CLO profitability and resulted in a decline in new CLO issuance, with volume falling 12% in Q1 2023 compared to the same period in 2022. Additionally, it has become increasingly difficult for issuers to sell the equity portion of CLOs, according to Eagle Point, with approximately 85% of CLOs priced during the first quarter being issued by CLO managers with captive equity vehicles.

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