Egan-Jones Finds CLO Issuance Still Muted Despite Supportive Credit Conditions

NEW YORK, Aug. 11, 2026 /PRNewswire/ -- Egan-Jones released a report examining conditions in the collateralized loan obligation market, finding that new issuance recovered only marginally in July even as credit spreads held near recent lows. The firm suggests the limited pickup may reflect concerns about credit quality.

July issuance edged up to 111 deals, totaling $43.2 billion, from 101 deals in June. Volume remains well short of the November 2024 peak of $54.6 billion, leaving supply subdued against a financing backdrop that has stayed accommodating.

That backdrop is visible across markets. The ICE BofA US High Yield option-adjusted spread, a standard gauge of the extra yield investors demand to hold lower-rated corporate debt, sat near an annual low at 284 basis points, against a high of 461 basis points in April 2025. The five-year Treasury has firmed to 438 basis points, near the top of its twelve-month range, while the total US stock market eased roughly 0.5 percent over the month.

Collateral quality held up. The weighted average rating score across covered deals improved slightly, and the share of assets rated CCC+ or lower was stable to modestly lower. Asset and tranche coupons both dipped, though Egan-Jones notes the decline has flattened in recent months.

The analysis covers 1,622 CLO deals rated as of July 2026. Senior tranche subordination, the loss cushion sitting beneath senior holders, averaged 35.5 percent, with mezzanine tranches at 13.5 percent. Egan-Jones also states that it takes a more positive view of CLO credit quality than other credit rating agencies, a comparison the publication sets out in full. Egan-Jones' CLO ratings are non-NRSRO ratings.

Taken together, the findings describe a market where financing conditions and portfolio metrics remain sound while supply has not followed. Egan-Jones' more constructive assessment of credit quality, set against issuance that has yet to recover, is the tension at the center of this month's review.

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.