SFA Research Corner: Private Credit Fuels Middle-Market CLO Issuance
Provided by Structured Finance Association
Issuance of middle-market CLOs (MM CLOs) has reached $12.1 billion so far in 2023, surpassing the supply recorded for all of 2022 and on track to reach a new high of $23 billion. The uptick has been facilitated by an increase in private credit and nonbank lending. The collateral loans in an MM CLO are typically made to businesses that are “larger than small businesses but too small for large-scale commercial lending or syndicated credit,” with annual revenues ranging between $10 million and $1 billion—the Federal Reserve’s definition of MM companies. According to research by the National Center for the Middle Market there are over 200,000 middle market (MM) companies in the U.S. whose business activities account for 33% of the U.S. private sector GDP and employ approximately 48 million people.