CLOs: Collateralised loan obligations (CLOs) are a way to invest in groups of loans.
CLOs Until Now are mostly “BSL” CLOs: The loans used for CLOs so far have mostly been “broadly syndicated loans” (“BSLs”). These are loans made by banks to large companies.
Private Credit CLOs: These are similar – but instead of the loans being made by banks to companies, they are made by private credit funds to companies.
Differences: Private credit CLOs have used smaller loans to smaller companies than BSL CLOs. But as private credit originators now compete directly with banks for leveraged loans to large companies, we will see more private credit CLOs (“PC CLOs”) that look very similar to BSL CLOs.
PC CLO Growth: 50% year-on-year new issuance growth over the last few years. Historically been a US-only transaction – but Europe got started in 2024. Many new issuers entering the market each year. New issuance $80 billion last year (2025). Grown to around 20% of total CLO issuance.
Why care: For investors – PC CLOs open up a new asset class (which currently has a spread premium over BSL CLOs). For private credit GPs – PC CLOs provide a growing, diversified source of funding. For investment banks – supporting the growth of this sector can create high-value advisory and trading business. For law firms – volumes are increasing and deal structures are evolving quickly – creating demand for capable capital markets lawyers.