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Poor loan supply and weak arbitrage are not usually a recipe for high CLO demand. But CLO managers are capitalizing on strong demand for CLO debt by upsizing deals, and taking advantage of recent hints of softness in the loan market to source extra assets.

Deals that hadn’t closed as of this past week have an opportunity to ramp more smoothly as loans have dropped around a point across the past three trading days. They were down an eighth to a quarter on 14 October, half a point on 10 October and another quarter point on 9 October, sources told 9fin.

Ramping with an upsize has been challenged by the loan supply up until now, though. This bottleneck has limited CLO new issuance this fall, sources say. September saw only $7.83bn of US BSL CLO new issues printed, constituting 20.5% of total issuance that month, according to 9fin data. The lion’s share of issuance last month came from repricings, especially resets ($18.21bn). Back in August, things were better as $13.65bn in new issue CLOs represented 27.5% of monthly issuance. On average, new issues made up 34% of all pricings year-to-date, with the peak in May where $17.83bn of new issues comprised 61% of pricing volume.