SFA Research Corner: Private Credit Loans Trending Larger, Contributing $22bn to CLO New Issuance in 2023

In a recent analysis of 28 private credit loans and 15 broadly syndicated loans, Moody’s identified a noticeable correlation between the expanding size of private credit loans and the diminishing presence of financial maintenance covenants. Unlike the covenant-lite structures commonly associated with syndicated loans made to large companies, private credit loans made to middle-market companies have historically been characterized by robust covenant packages and maintenance requirements. In 2023, CLOs backed by private credit loans have contributed $22 billion to the $99 billion CLO new issue market. This marks an 85% increase compared to the previous year and stands in stark contrast to CLOs backed by broadly syndicated loans, which experienced a 31% decline during the same period. Read More.