Sam Robinson

Tobi Akinola

If law firms were pleased with CLO issuance volumes in 2024, then 2025 will have been music to their ears, with records broken in US BSL new issues, middle-market CLOs and European CLOs.

As the market lurches back to life and prepares for what may become the new normal in terms of elevated volumes, 9fin looks at the most prolific law firms in 2025, as well as all the people moves and promotions, and a look back (and forward) at regulatory updates, doc changes and market movements.

Milbank closed out 2025 at the top of the manager counsel tables for US BSL CLOs, having worked on $111.4bn of US CLO mandates across the year, for a 24% market share. Dechert ran it close though after a remarkable Q4 when it worked on over a hundred mandates to put it second position and only $5.2bn behind the leaders.

Paul Hastings dominated the arranger counsel rankings, having worked on nearly four times as many deals as its closest competitor.

Dechert took top spot in private credit CLOs, having worked on nearly 40% of available deals in the sector. Latham & Watkins ended the year in second spot, while Winston & Strawn took third place.

Paul Hastings overtook Cadwalader to finish top of the arranger counsel tables for private credit CLOs. Cadwalader was leading the table as of the end of Q3.

Finally, in Europe Milbank also took top spot in the manager counsel rankings, securing a third of the market share available, with Paul Hastings and Sidley Austin rounding out the top three spots. On the arranger counsel side, Paul Hastings completed a trifecta of top spots, again overtaking Cadwalader, which earlier in the year lost partners to Orrick, Herrington & Sutcliffe, which finished the year in fourth position.

In Europe, despite positive updates on a longer-term regulatory overhaul, 2025 was notable for throwing up two unforeseen road bumps in an otherwise stellar year for CLO issuance.

The first came with inopportune timing just before US president Donald Trump’s tariff announcements, when a joint report from the EBA, EIOPA and ESMA announced a clarification to risk retention rules, which declared that third-party originator structures must have no more than 50% of assets coming from securitised ‘risk retention’ assets to satisfy the sole purpose test.

Whilst a number of clarifications and updates followed, the market adapted swiftly, in some cases changing the method of risk retention compliance, and resumed printing without a significant pause in issuance.

Looking to 2026 however, and the sole purpose test is having long-term impacts on how European CLO managers structure deals and risk retention vehicles.

Retention is very commonly held as vertical instead of horizontal now, says Alex Martin, partner at Milbank, as this produces less ‘bad income’ from the point of view of the sole purpose test.

“For some managers who had CLO equity funds that had deployed a lot of capital into horizontal retention, it was just impossible to fix that situation,” says Martin, “if for example you have 10 horizontal strips in your fund it’s very difficult to offset that with “good” income. So, some managers needed to pivot in their approach and structure.”

One of the ways managers are sourcing ‘good income’ Martin adds, is investing in other CLO notes, either in their own CLOs or third-party deals.

And although managers have adapted, there can be a cost attached. "It’s a hurdle,” says Franz Ranero, partner at Latham & Watkins. “It essentially decreases the concentration effectiveness of your retention capital, because you need to raise for a broader strategy beyond risk retention.”

And some suggest that lingering doubts remain. “The sole purpose test is always something that you need to consider when setting up a structure, and specifically the guidance on the predominant revenue aspect,” says David Quirolo, partner at Orrick. “There's certainly a lack of clarity on how one calculates that. So, I think there's still some uncertainty.”

The other obstacle was a clarification that originators cannot use conditional sale agreements (CSA) when sourcing assets, in a (long-delayed) Q&A response by the European Commission during the summer break.

That problem, at least, seems to have been solved. As previously discussed in this report, lawyers worked on helping managers switch from CSA arrangements to forward purchase agreements, or identifying themselves as exempt through limb (A), and the matter is now considered settled, according to sources.

Looking forward to 2026, more widespread changes (that are actually expected) are due when the EU trilogue puts forward plans for its new set of securitisation regulations.

On those proposed changes, Martin says, that whilst the question is still somewhat open, “if it stays the way it's proposed, there’s nothing of real significance there. The template reporting might reduce in length, and you might have more deals being classified as public securitisations, so having to report to the repositories,” says Martin. “The due diligence requirements are a little bit more principles based, like the UK ones are at the moment. These are small things around the edges.”

“On the European regulatory front, it’s all medium-term positive, and no known changes or developments represent significant challenges, in terms of having a dampening effect on issuance,” says Ranero. “Public vs private is not a real issue, it’s just mechanical. We lawyers will deal with that."

All of this of course, is based on anticipated legislation, lawyers hasten to add, and doesn’t exclude the possibility that the market is blind-sided by more unanticipated issues.

"The key message coming out of last year for European CLOs is it's not just a resilient market when the stars are aligned, but a resilient market when challenges are thrown at it from every direction,” says Ranero.

One potential arm of the regulation that might have a bigger impact is the new Solvency II proposals, which would reduce the capital requirements for insurers investing in CLOs, as previously covered by 9fin.

The proposals, which are not due to come into force until January 2027 anyway, have generally been welcomed as a step in the right direction, albeit one that doesn’t reach far enough.

Lawyers pointed out that requirements for senior non-STS tranches was still higher than for banks, and that the charges for further down the capital stack remained punitive.

One thing to keep an eye on in 2026 is movement from UK regulators, who are due to put forward their own proposals to match the EU’s new regulation.

"There is and will continue to be divergence,” says Ranero, “but the mood music is very much that the UK will stay competitive in this market, so will find ways to ensure that’s the case.”

“The UK has been pragmatic in the way that it's approached the securitisation rules, so we're probably not expecting any big shocks there,” adds Martin. “If anything, it seems like based on the current political situation, the UK and EU are seeking to become more aligned, so I doubt there'll be anything too divergent as a result.”

On the US side there has been less upheaval on the regulatory side, and indeed at the end of last year CLO managers received a bit of good news when the SEC confirmed that banks would be able to continue treating loan tranches as receivables.

“It was a very good result,” says Joe Beach, partner at Orrick.  “We worked closely with multiple banks in the US who are investors. It’s very pleasing to get confirmation that these loans are to be considered loans. We may need some structuring tweaks in them, but they’re ones that are very easy to make."

As previously covered by 9fin the confirmation from the SEC only explicitly endorsed loan tranches that don’t have the option to be converted into notes, leading many investors to look at removing this ability from documentation.

Undoubtedly this is a good result for banks already investing in CLO loan tranches, although whether this will encourage more in remains to be seen. “It all kicked off because there was one or two other banks who were looking at these loan tranches, and asked their accounting firms in advance,” says Beach.

“Whilst the hope is this will encourage more in, these are banks who are just looking to change the form in which they invest, so perhaps it will result in more liquidity or perhaps it's just a more comfortable way for these banks to carry off their investment regime. I think that remains to be seen.”

If there is a blot on the copy-book for US CLOs, it might be NAIC proposals to reform capital charges for US insurers. Whilst recent developments have been somewhat positive, it’s likely that new charges will be higher than the current regime.

“I think that’s very open right now,” says Beach. “You saw on the news Athene dialling down significantly. I think outside of any regulatory rulings there's a reassessment in the insurance industry of CLO investments. So, I think it's very challenging to predict what's going to come with that market this year.”

A final question coming into 2026 is the potential status of Altice USA’s antitrust lawsuit against its lenders, which alleged that lenders engaging in the co-op agreement were behaving in an anti-competitive manner.

Whilst lenders in general might not be enthusiastic about such aggressive pushback from an issuer, it could spell good news for CLOs who’ve previously been on the outside of these co-op agreements.

CLO managers are watching these developments with an interested eye, says Nate Spanheimer, partner at Orrick. “From a CLO-only perspective, not accounting for the nuance that some of these managers may play in this space on multiple fronts, it’s probably nothing but positive, because any claim against co-oping would likely be for the benefit of the remainder of the lender stack, which would include the CLOs,” says Spanheimer.

“Overall it’s likely to be net accretive from a CLO-perspective, he adds, as CLOs are not generally considered to be active participants.”

On the back of a record year for issuance in both the US and Europe, and in anticipation of a repeat performance in 2026, CLO warehouses have come under the spotlight.

9fin previously reported that a record amount of warehouses were currently open in Europe, as managers look to maximise their issuance potential. One new innovation in recent years has been the rise of master warehouses.

“Everyone’s continuously looking at making warehouses more efficient including more and more master warehouse structures both in the BSL space and the newly started European private credit CLO space,” says Quirolo.

We’re also seeing a lot more third-party equity in warehouses, he adds. This is a trend that is expected to continue predicted Anusha Singh, head of EMEA CLO primary at JP Morgan, in our 2026 outlook for European CLOs.

Warehouse length, particularly in Europe, is also evolving. “Duration wise the trend is in certain cases moving towards 18-month reinvestment periods, whereas it used to be 12 months, followed by the extension or amortisation period as the next 12 months,” says Martin. “Now we’re seeing a lot more 18 and 6, or in some cases a few years at the more opportunistic end.” Clearly, flexibility is paramount.

Some managers are opting for a variety of structures, says Martin, opening both normal duration warehouses and some more opportunistic structures alongside them. “They’ll have two warehouses open, one they’re going to do in Q1/Q2, and one that's longer duration to pick up assets at an opportune time,” says Martin.

Amongst those open warehouses lie more debut managers. 9fin has previously reported on the progress of Kartesia, Elmwood, Diameter and Muzinich, as only the most advanced amongst managers looking to debut in Europe in 2026.

"Firstly there’s quite a few new managers coming to market,” says Ranero. “What's been really interesting is the diversity of types of those managers. We’ve seen some over the past year that diverge away from the typical credit arms of large private capital firms, we’ve seen a traditional UK insurer, we’ve seen Liechtenstein royalty, that diversity of new managers will continue.”

“I think the US is probably in more of a consolidation phase,” says Spanheimer. “It doesn't mean no one's coming out this year, but you're not seeing excitement about the launches in the same way. In fact, I think you're seeing more management platforms getting picked up, and smaller managers getting absorbed into bigger platforms.”

“There just seems to be a premium on a certain size in this market in order to keep your fees low and maintain competitiveness,” adds Beach.

In Europe, one of the perennial concerns is whether there’s enough assets to go around and support so many new managers entering the market.

9fin previously reported on a deal repaying debt investors earlier due to a lack of suitable assets, and a Fitch report highlighted the increase in cash balances across reinvesting CLOs.

An increase in M&A supply is perhaps the most frequently uttered prediction amongst CLO market participants, but 2026 may actually be different.

“The view from our M&A colleagues is that there’s a lot of optimism,” says Martin. “There is every year but this seems a bit more real, and you are seeing a lot of energy and infrastructure deals coming through, and IPOs hopefully lining up. AI is significantly helping the process and making it easier to get deals done. And that’s obviously what CLO managers want — for the asset supply to be better than it has been.”

Generally speaking 2025 was a year where the primary focus was on getting deals over the line, rather than quibbling over docs, according to sources, however, as always there’s been a few areas of focus for managers and investors.

Given the high volume of resets in 2025 (€58.3bn of European CLOs over the course of the year), managers have been focused on improving that process.

“A lot of managers are seeking to include the post-reset pricing feature,” says Martin. “Where a deal has partially amortised and needs to upsize again as part of a reset, this feature permits the manager to start committing the deal to additional assets without a warehouse, and prior to the funds to settle those assets being available from the reset transaction.”

“In practice, we think this is a good idea for the deal because it reduces the costs of executing a reset,” says Martin, “It has been stipped out of some deals for fear of the CLO committing and then the reset failing, although that doesn’t seem like a real-world issue if you’re only allowing the deal to commit after the reset has priced.”

In the US private credit CLO issuance represented around 15% of US CLO pricings, which was enough to break issuance records. Alongside the growth of the market, participation also continues to expand.

“On the private credit side, the documents are always going to look like captive equity, not third party equity,” says Spanheimer. “What you are starting to see though, are third party equity vehicles that are coming in as an SMA over the fund. So they'll come in at the fund level, and then the fund will be managed by the manager, and then that'll manage the vehicle under it. So, you are starting to see some third party private credit deals in the US, but they wouldn't necessarily show that if you looked at the docs.”

And in Europe, everyone is asking what the nascent private credit CLO market, which saw its second and third deals in 2025, will do this year.

Now that we have a proof of concept, there’s a lot more interest in the product, says Quirolo. “I suspect there will be a number of issuers this year, including some managers who have not issued previously,” he adds.

“The European private credit market is smaller, there’s always the issue of getting enough assets for a deal. Innovations like the multi-currency provisions make putting those deals together easier, the matching adjustment changes brings in UK insurers as new investors, so all of those things help, but we’ll always be looking at innovating with the structures.”

As always, the final quarter of the year also saw some activity with lawyers switching firms or being promoted.

Luke Stowe joined Rimon PC as partner in its Middle East structured finance practice, after stints as counsel at Weil Gotshal and Sidley Austin, to work on US and European CLOs from London, Dubai and the US.

Latham & Watkins bolstered its earlier success with Ranero and Smallwood, by bringing on board real estate and structured finance partners David Oppenheimer, David Carne and Lucy Oddy, who join in London, also from Allen & Overy.

The start of the new year has also brought a raft of new promotions to partner. Amongst them are Robert Wyse Jackson, who becomes a partner after over 11 years with Milbank; Vera Quagliato who is now a partner at the newly combined McDermott, Will & Schulte; Jennifer Ellis, who becomes partner at Reed Smith after two years there as counsel, and two new partners for Sidley Austin. Luke Maiman, who joined there as counsel from A&O Sherman in 2025, is now a partner in the firm’s New York office, and Azeem Sulemanji is now a partner in the London office after nearly four years with the firm.

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