Opal Group CLO Summit 2024: Five Takeaways

Five Takeaways from the Opal Group’s CLO Summit.

Palmer Square's Jon Brager attended and spoke on the macroeconomic & geopolitical outlook for 2025. Here’s his key insights shaping the market for year-end and beyond:

• Bullish Sentiment: The overall tone was positive, with market participants actively working to price deals before year-end.
• The State of Supply: The consensus is that CLO issuance will stay strong next year, driven by low liability levels and the potential for tighter AAA spreads. Even with the challenged arbitrage, printing at these historically low levels remains attractive.
• Relative Value: Despite historically tight spreads, the all-in yield of CLO debt remains attractive, particularly in a higher-for-longer interest rate scenario.
• CLO Equity Focus: Discussions centered around CLO equity, signaling robust issuance potential for 2025. European CLO equity is particularly attractive due to fewer repricings compared to the U.S.
• European Engagement: European presence at Opal continues to grow, with approximately 15 EUR managers conducting meetings.

Overall, the market is active, dynamic, and poised for an exciting year ahead.

Disclosures:

Investing involves risk.

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