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Analysis CLOs
Hot August sets tone for rest of 2025
by Shant Fabricatorian & Lisa Lee
Some European CLO managers still get time off in summer, but the days when the whole market shut down are long gone. So, in a busy year for CLOs, this August was the second busiest ever
The halcyon days of summer are no more — at least for the CLO market. The annual ritual of closing up for most of August appears to be a thing of the past.
This year, CLO managers and investors worked harder than ever during the month historically earmarked for lounging on the Riveria or sailing in the Bahamas, according to Creditflux analysis. Deal issuance for August totted up to the second-busiest ever for that month, for both the US and Europe.
US CLO issuance in August vs monthly average ($bn)
Source: Creditflux
“August did not slow down at all. In addition to CLO pricings, there was a lot happening in the background getting ready for September,” says Dushy Puvan, head of EMEA CLOs and financing at BNP Paribas.
Impressively, in a year that’s blazing toward beating 2024’s records, global issuance in August ran at the third-hottest pace seen so far this year, at USD 46.3bn in the US and EUR 6.6bn in Europe. Only the ultra-busy start to the year in February and March saw more deal activity.
Deals came from managers with captive equity
Laila Kollmorgen
Portfolio manager
PineBridge Investments
Resets keep the market turning
Part of the reason is the overhang from the past. In 2022 and 2023, when inflation was soaring and central banks were hiking interest rates, CLO issuance slowed to a glacial pace, and those deals that got done were at triple A spreads which hit SOFR plus 220bps. Those deals have now come out of their non-call periods, fuelling churn as equity investors look eagerly to reset liabilities at much reduced spreads, and debt investors look to stay invested in CLO paper.
“As an investor being taken out of existing positions in CLOs that are refi-ing or resetting... there’s money to be put to work,” says Laila Kollmorgen, a portfolio manager at PineBridge Investments who invests in US and European CLOs.
August pricings set a direction of travel
Dushy Puvan
Head of EMEA CLOs and financing
BNP Paribas
The maturation of the market — now sized at USD 1.3tn and no longer considered a niche corner of credit — also accounts for some of the change.
“When I was asking if we need to be kind of done-and-dusted before mid-August or at least the last week of August, the feedback I got multiple times was the market doesn’t really shut down anymore,” says David Saitowitz, head of US Liquid Credit at ICG, whose firm was busy pricing a reset and working on a refinancing for the autumn.
“It may slow down — and if you look at the weekly numbers, it did slow down a little bit — but it didn’t shut off.”
European CLO issuance in August vs month avg (€bn)
Source: Creditflux
CLOs are now a large, orderly business
“We’re constantly speaking to the desk to understand their issuance calendar and matching it with ours. It’s more like booking a date than saying, ‘The market’s open, let’s go do a deal.’ The CLO market has gotten so large and orderly it’s now more of an assembly line sort of feel,” says Saitowitz.
As the entire market has grown, so have CLO managers. Being a regular issuer that constantly mints deals boosts assets under management, which helps increase liquidity and can attract more investors. Some of the biggest names have priced deals during this period, including Apollo, Blackstone, Golub and Carlyle.
It’s now more of an assembly line sort of feel
David Saitowitz
Head of US Liquid Credit
ICG
Of course, not everyone in CLOs was tied to their desks in August. Creditflux knows bankers, lawyers, managers and investors who went on holidays to Sardinia, Japan, Hawaii and the Swiss Alps, among other desirable hotspots. And investors in some countries, particularly in Northern Europe, still knock off for most of August.
But the numbers tell the story. This year was the strongest August on record for US CLO repricings, which totalled over USD 28bn, according to Creditflux data. New issues also ran at a solid pace, albeit slightly behind the rate seen in August last year, at USD 11.3bn versus USD 13.6bn. While European pricings did not run as hot as their US counterparts, with no new issues over the second half of the month, there was still almost EUR 4bn worth of repricing issuance over the period.
Global CLO issuance 2025 ($bn)
Source: Creditflux
Interestingly, the market pulled off August’s solid new issuance performance despite an ever-weakening arb. The leveraged loan market has seen a huge repricing wave and a number of top leveraged loan issuers nabbed spreads as low as 175bps — a level not seen since before the global financial crisis. Were the arb better, issuance could have been higher.
“Given that the arb is not that attractive for new issue deals, those that are coming to market have typically come from managers that have captive equity and, likely, have been warehousing transactions for upwards of a year,” says Kollmorgen.
As summer fades, the market is now looking to September and beyond. “As investors start coming back post summer, the August CLO pricings set a nice tone for debt execution and help steer the direction of travel,” says BNPP’s Puvan.
