The New Manager Landscape

Economic headwinds, spread volatility and intense competition for loans in a shrinking primary market are perfectly rational reasons to conclude that launching a debut CLO today would be a brave step, however 25 (18 percent) of the 141 managers that have issued a US CLO since January 2018 were new entrants to the market, creating a healthy and diverse landscape that offers investors choice and the opportunity to pinpoint a manager whose investment style and background matches their investment objectives.

There is no doubt that successfully launching a CLO platform comes with significant challenges but the rewards would appear to be worth the risks and the effort given the continued flow of new managers entering the market.  One of the main obstacles to launching a CLO platform is sourcing the equity; unless the manager has access to its own source of funding, be it intra group or from other managed funds, they are required to seek backing from a third party investor