CLO Refinancing Plans Put On Ice in Europe as Funding Costs Rise

Rising CLO funding costs driven by the war in the Middle East have prompted some European CLO managers to shelve planned refinancing, removing expected supply from the market. That behavior will make it harder for the region's riskiest borrowers to roll over leveraged loans and CLO exposures, likely putting upward pressure on spreads and tightening credit conditions in European leveraged-finance markets.

Analysis

Rising CLO funding costs driven by the war in the Middle East have prompted some European CLO managers to shelve planned refinancing, removing expected supply from the market. That behavior will make it harder for the region's riskiest borrowers to roll over leveraged loans and CLO exposures, likely putting upward pressure on spreads and tightening credit conditions in European leveraged-finance markets.