In many respects 2024 has been a strong year for European CLOs, with record issuance figures, tightening spreads, and firsts in the ETF and private credit CLO space. 2025 seems set to better it.

CLO research desks are predicting another record year for European CLO issuance, with all bank desks predicting €45bn-€50bn of new issuance, and €33bn-€60bn of repricings.

Although there’s a limit to the amount of spread tightening that can occur, banks are generally united in their view that this is the direction of travel. And as far as solitary trailblazers in ETFs and private credit CLOs go, the general view is that they won’t be lonely for long.

2024 hasn’t been completely perfect, with the major flies in the ointment being rising triple-C buckets and defaults, as well as amortisation and liquidations cutting into the proportion of new issuance that is actually net supply, but on both fronts research desks predict that even if 2025 won’t solve all problems, it also isn’t likely to exacerbate these issues.