KBRA releases research that examines the evolution of European middle market collateralised loan obligations (CLO) and the role they may play in the financing, distribution, and management of private credit portfolios across Europe as the market matures.
Key Takeaways
- The European middle market CLO sector remains at an early stage of development, with only a limited number of publicly rated transactions completed to date. However, recent issuance activity suggests that managers and investors are increasingly exploring securitisation as a funding and portfolio management tool for private credit assets.
- Unlike traditional broadly syndicated loan (BSL) CLOs, European middle market CLOs are typically backed by less liquid, privately originated loans with different cash flow characteristics, and more limited secondary market liquidity. These differences create both opportunities and structural challenges for securitisation transactions.
- Recent transactions have demonstrated a relatively rapid evolution in market structure, including the emergence of replenishment features, multicurrency frameworks, and discussions around potential hybrid CLO structures combining private credit and syndicated loan collateral. At the same time, the market continues to face important constraints, including operational complexity, limited standardisation, and a still-developing institutional investor base.
Click here to view the report.
Recent Publications
- Private Credit: In Middle Market Direct Lending, Cash Is King
- European CLO Manager Style Comparisons: April 2026 Update
- Private Credit: Evaluating PIK Optionality in CLOs
About KBRA
KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.
Doc ID: 1015162
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