An August record in the CLO market
August isn’t usually a record month for fundraising or deal-making. Tell that to the CLO market, which is having its most active month ever.
Driving the news: New CLOs, or collateralized loan obligations, have closed at a pace not touched in the last decade, according to data from LCD, an offering of S&P Global Market Intelligence. And August isn’t even over yet.
Why it matters: CLOs are funds that invest in leveraged loans, or the loans of larger companies with lower credit ratings. More CLOs means more dry powder to support debt financing for private equity buyouts and M&A deals.
Context: 2021 has been a banner year for fundraising across many asset classes — including private equity, according to PitchBook.
By the numbers: As of Aug. 23, $17.1 billion in U.S. CLOs had closed during the month.
- The previous monthly record was March 2015’s $16.2 billion.
- The third and fourth highest months were both in 2021: February and June brought tallies of nearly $16 billion apiece.
The bottom line: Plenty more buyouts are in the works, and they'll need financing. With this rate of CLO formations, that shouldn't be a problem.