Hot on the heels of a record year for issuance, hopes are high among CLO market participants in 2025. Leveraged loans are trading at their highest levels since 2021, according to the Morningstar LSTA Leveraged Loan Index, but some in the market are expressing concerns around mounting tail risk in CLO portfolios that could impair performance of CLOs further down the line.

According to Octus’ Portfolio Analytics data, first lien net leverage among leveraged loans in CLO portfolios rose from 4.11x to 4.16x through 2024 in the U.S. market. In Europe, first lien net leverage rose to 4.94x from 4.72x during the same period across CLO portfolios.

You can read the complete article from Octus here.