As the loan market has become increasingly bifurcated, with a large proportion of loans trading above par, and idiosyncratic risks continuing to feature more prominently, selling into the current strength of the loan market may appear attractive to some lower-mezzanine investors.
On 15 October 2025, several single-B tranches traded with cover bids ranging from 825 DM to 1,001 DM, and MVOCs ranging from 102h to 105h.
Yesterday saw a relatively long list of EU CLO single-B tranches on BWIC, with DM price talks ranging from the L800s to L1200s, depending on their MVOC and WAL.
Over the past two business days, eight EU CLO single-B tranches traded, with cover bids ranging from 839 DM to 975 DM.
Single-B tranches, given their position as second-loss in the CLO structure, are particularly exposed to idiosyncratic risk and may face heightened scrutiny in the aftermath of the First Brands episode.
The loan market rally has driven broad spread tightening across the CLO stack. Mezzanine tranches responded the most, reflecting their higher leverage and credit sensitivity. In contrast, senior tranches from top-tier CLOs showed a beta below 1.0, indicating a more muted reaction to loan spread moves.
