EU Module

This week saw several US CLO equity tranches trade or be talked at levels materially lower than on their previous BWIC dates.

CLO equity has faced a challenging period, with ongoing asset repricing weighing on annual distributions. Still, there are bright spots in the market. For example, a majority equity stake, ARES 2023-ALF4A SUB, was recently traded via BWIC. The deal’s accretive reset, priced by Citigroup on 3 October 2025, reduced its WACC by nearly 80 bps—more than offsetting the 60 bps decline in its underlying collateral spread since inception.

Across these vintages, reset deals outperformed their non-reset counterparts, underscoring the value of resetting.

Yesterday saw several US BSL CLO and EU CLO equity tranches from the 2018–2021 and 2024 vintages trade in the secondary market.

Based on a detailed review of 596 EU CLO deals, this study highlights which managers have delivered standout equity results across vintages. Redding Ridge AM and Bridgepoint Credit lead the way, with several others also ranking in the top quartile. Out of the 596 deals in the sample, 251 adopt a vertical risk retention structure and 345 a first-loss risk retention structure. Overall, first-loss deals have outperformed their vertical counterparts. For instance, the median vertical equity tranche ranks at the 46th percentile, compared with the median first-loss equity tranche at the 54th percentile. Twenty-eight EU CLO managers have both vertical and first-loss deals under management. Of these, 18 saw their first-loss deals outperform their vertical deals on average, while 10 experienced stronger performance from their vertical deals.

Yesterday, a notice was announced on Cairn CLO VIII, in which the retention holder directed the redemption of the rated notes.

The reset of Carlyle Global Market Strategies Euro CLO 2015-1 priced yesterday. The deal, originally closed in March 2015, was refinanced in April 2017 and first reset in February 2020.

Among 2025 EU CLOs, the median WAS compression since inception was about 8 bps. A quarter of deals saw at least 14 bps of compression, while around 16–17% managed to maintain or improve their WAS.

Since closing, the deal’s reported WAS has declined from 415 bps to 370 bps as at 29 August 2025. However, its recent reset offset the impact of asset spread compression, cutting WACC by roughly 31.2 bps while extending the RP by 1.5 years.

AVOCA 31X SUB traded with a cover bid of 79.02 (source: SCI). This 2024 deal closed on 6 September 2024, with its non-call period ending on 5 March 2026 and a reinvestment end date of 15 April 2029. Its current WACC stands at 196 bps, with the AAA tranche priced at Euribor +125 bps.

Yesterday saw active trading in CLO equity. Blackstone, RBC BlueBay, Alcentra, and PGIM See Equity Tranches Stand Out in BWICs

Among 121 EU CLOs that have been, or are expected to be, fully redeemed, equity tranches from the 2020, 2022, and 2023 vintages stand out with strong final IRRs and average equity NAVs above 100%. The analysis also compares outcomes between first-loss and vertical risk retention deals, which so far have shown broadly similar performance. By vintage, reset deals outperformed non-resets across 2013–2016, underscoring the value of resetting.

Yesterday, a majority stake of €13.805 million in Dryden 103 Euro CLO 2021 subordinated notes was traded via BWIC. The deal’s performance is noteworthy: it was priced and closed in late 2022 with very wide liability spreads and a sizeable fixed-rate collateral exposure in a rising rate environment. These factors resulted in sub-par distributions until its reset in late 2024, immediately after the non-call period. At the time, the outlook appeared bleak, with equity NAV depressed and distributions running low. Since bottoming out in mid-2023, however, the deal has staged a steady recovery. Equity NAV rose consistently…

In recent months, a strong loan market, marked by elevated loan prices and ongoing repricing activity, has prompted the redemption of several seasoned EU CLO deals. This article examines a sample of seven EU CLOs that have recently been redeemed.

EU CLO equity has outperformed US CLO equity, based on BWIC colour from a sample of approximately 446 equity tranches traded since July 2024 (source: SCI). This trend is also consistent with findings from 2.0 CLO deals that have been fully liquidated to date, according to CLO Research.