Egan-Jones Highlights Improving CLO Credit Quality in July Market Update

NEW YORK, July 8, 2026 /PRNewswire/ -- Egan-Jones released an analysis summarizing recent developments in the collateralized loan obligation market, noting modest improvements in credit quality despite slower issuance activity and historically tight credit spreads.

CLO issuance moderated in June following a rebound in May, with 101 transactions totaling $42.3 billion compared with 122 transactions totaling $51.5 billion in the prior month. Egan-Jones notes that issuance also remained below the November 2024 peak of 127 deals valued at $54.6 billion. At the same time, the ICE US High Yield Option Adjusted Spread remained near an annual low, while CLO weighted average rating scores improved modestly and lower rated collateral remained stable.

The report also highlights continued strength in overall CLO credit quality. As of June 2026, Egan-Jones rated 1,633 CLO transactions and observed stable portfolio characteristics across weighted average rating scores, diversity scores, leverage measures, and concentrations of CCC+ or lower rated assets. Asset and tranche coupons declined modestly during the period, reflecting broader market conditions.

Egan-Jones notes that its credit assessments generally remain more favorable than those of other rating agencies, with numerous CLO tranches receiving ratings one or two notches higher than peer assessments. According to the report, this reflects a methodology that emphasizes estimated losses, conservative default assumptions, model driven analysis, and monthly surveillance using updated trustee reporting.

The publication also provides updated statistics on tranche subordination, coupon levels, spreads over three-month SOFR, and underlying loan characteristics to assist institutional investors and market participants in evaluating current CLO market conditions.

Egan-Jones concludes that while issuance has moderated from recent highs, key credit metrics remain stable and recent trends continue to support a constructive view of the CLO market.

About Egan-Jones Ratings
Egan-Jones, an NRSRO founded in 1995, offers timely and accurate credit ratings and proxy services.

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SOURCE Egan-Jones Ratings Co.