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Analysis Infrastructure CLOs
Managers spot greenfield in infra CLO market
by Kathryn Gaw & Lisa Fu
As infrastructure CLOs gain momentum in the US, attracting new managers and investor attention, could the growing market finally make its way across the Atlantic to Europe?
Infrastructure CLOs are starting to gain traction in the US, with new managers rumoured to be entering the space and others tentatively exploring what it would take to make their own debut. According to multiple market participants, the first European infrastructure CLO could be priced in the not-so-distant future — a sign of the growing demand for infrastructure financing.
As it stands, the US market amounts to approximately USD 10bn, but the potential for growth is enormous. According to Dan Wohlberg, head of CLO issuance and origination at Eagle Point Credit Management, given the increase in both demand and asset supply, the market could double or even triple in size over the next five to 10 years.
“There has been a real upsurge in these deals over the past year or so,” says David Gingold, a partner at Cadwalader (HLC). “We’ve gotten inquiries both in the US and in Europe to do infrastructure CLOs. In Europe, whether they happen or not, you never know definitively, but there appears to be interest.”
In the US market, the infrastructure CLO space has been dominated by one name for the past few years: DWS. DWS launched the first US infrastructure CLO offering, RIN I, which closed in October 2017. Since then, the firm has issued another 14 infrastructure CLOs, making it by far the most prolific name in the space. Starwood priced its inaugural infrastructure CLO in March 2021, and in December 2025 Barings joined their ranks, pricing Barings Infrastructure CLO 2025-I at USD 508m.
We’ve seen a couple of other folks that are going to be issuers
David Gingold
Partner
Hogan Lovells Cadwalader
New managers emerge
The niche securitised product can be seen in Asia too. For example, in September, Singapore-based Clifford Capital issued the USD 802.4m Bayfront IX, its ninth and largest infrastructure CLO/IABS issuance to date.
This relatively small field may soon welcome new faces as more managers have been seen showing interest in infrastructure CLOs or actively planning a debut. HPS is working on launching an infrastructure CLO of its own, according to a source familiar, and several other CLO managers are working on similar deals, including Eagle Point. Earlier this year, Eagle Point’s head of infrastructure credit Jennifer Powers told Creditflux that the firm plans to build off of its existing infrastructure credit strategy by launching its own infrastructure CLOs. Powers says that the firm spotted an opportunity to make headway in this market as the BSL CLO market grows increasingly more competitive.
It is easy to see why infrastructure deals are becoming so popular at this moment in time. They are underpinned by real assets, created in response to soaring demand for essential services, such as energy plants, transmission lines, port facilities and, yes, data centres. For investors, they can add portfolio diversification while offering yields that sit somewhere between private credit CLOs and BSL CLOs — a tantalising prospect in a low-rate, tight-spread environment.
In order to do one, you need to have specialist infrastructure expertise, which is quite a different skill to managing corporate loans
Nick Shiren
Partner
Hogan Lovells Cadwalader
Real asset appeal
“We’ve seen a couple of other folks that are going to be issuers,” says Gingold. “Some people think of an infrastructure CLO as in some ways being less risky than a corporate CLO because the infrastructure loans may be collateralised by real assets or be related to necessary industries or services.”
However, there are a few hurdles for would-be investors. Infrastructure CLOs offer quite concentrated exposure to a handful of sectors, versus the high diversification provided by traditional BSL CLOs. While they can be useful as a diversification tool in a wider CLO portfolio, they are not exactly diversified vehicles.
“The number of loans in an infrastructure CLO is more along the lines of what you would expect in a private credit CLO,” says Jamie Flannick, US CLO research analyst at Deutsche Bank. “So lower diversity score, lower number of loans. Certainly, that would be a hurdle in terms of the amount of collateral there.”
Broadening the collateral pool
Gingold notes that the early infrastructure CLOs were chunkier deals from a collateral standpoint. While the collateral pool is deeper now, managers are finding other ways to add diversification to their infrastructure paper. Barings included a BSL sleeve representing approximately 15% of its inaugural infrastructure deal, raising the prospect of a hybrid infrastructure CLO in the future, featuring additional BSL or private credit exposure. This could make the sector more accessible for smaller managers who find it hard to enter the space and originate the level of high-quality assets that are required to get a deal over the line.
“In order to do one, you need to have specialist infrastructure expertise, which is quite a different skill to managing corporate loans,” says Nick Shiren, a partner at Hogan Lovells Cadwalader. “It’s a lot harder to overlay that skillset onto infrastructure.”
Despite the complexity, there seems to be a growing interest in the product. The next frontier appears to be the European market, which has yet to see a single infrastructure CLO. This is likely due to the smaller size of the market compared with the US, but HLC’s Shiren and Gingold say that they have seen term sheets for private financings of infrastructure loan assets with some sort of capital markets take-out, which could suggest the emergence of a European infrastructure CLO market.
The number of loans in an infrastructure CLO is more along the lines of what you would expect in a private credit CLO
Jamie Flannick
US CLO research analyst
Deutsche Bank
European interest grows
“Whether or not that’s realistic, I have no idea,” adds Shiren. “I don’t know of anyone who’s actually prepping a deal [in Europe] at the moment, but certainly there’s a lot of talk about it. We’re seeing a lot of interest.”
In the meantime, Eagle Point’s Wohlberg is one of the many market participants expecting substantial growth in the US infrastructure financing space.
“The potential for this market is large,” he says. “You have an opportunity to take a much broader universe of infrastructure loans and connect it to the CLO institutional capital through this familiar financing structure. My expectation is there’s going to be substantial growth in this infrastructure CLO market as more managers establish repeat issuance programmes.”
Flannick agrees that growth is inevitable, but it will not necessarily happen quickly. “It’s a category that’s still in a foundational stage and likely to see an inflection point when it comes to growth over the next few years,” he says. “I think it’s still at a fairly nascent stage.”
My expectation is there’s going to be substantial growth in this infrastructure CLO market as more managers establish repeat issuance”
Dan Wohlberg
Head of CLO issuance and origination
Eagle Point Credit Management
MARKET VIEW
Digital infrastructure
The rush to build data centres and other infrastructure that will support the growth of artificial intelligence has led to a surge of debt issuance. Suddenly, infrastructure CLOs, which package up infrastructure credits, find themselves with more choices as the pool of assets expand rapidly.
This has led some market participants to speculate that the first digital infrastructure CLO is not too far away.
“It wouldn’t surprise me if we saw a digital infrastructure CLO,” says David Gingold, a partner at Hogan Lovells Cadwalader. “But I’m not sure how imminent that is.”
According to a recent report from real estate services company JLL, almost 100GW of new data centres will be added between 2026 and 2030, doubling the current global capacity. This will require an infrastructure spend of up to USD 3tn. An infrastructure CLO underpinned by a majority of data centre and AI-related assets is not beyond the realm of possibility. However, recent concerns about the bursting of the AI bubble has led some CLO investors to set AI concentration limits in their portfolios, which makes an AI-linked digital infrastructure CLO seem a riskier prospect.
The AI build-out may create more infrastructure credit assets across areas beyond data centres, such as power generation, storage, connectivity and the like, says Dan Wohlberg, head of CLO issuance and origination at Eagle Point Credit Management. However, not all of these AI-driven financing assets will be suitable for infrastructure CLOs.
Managers will need to distinguish durable infrastructure cashflows from technology risk, Wohlberg adds.
