Egan-Jones Reports on Recent Trends in CLO Issuance and Credit Metrics

Egan-Jones Examines October CLO Issuance and Credit Metrics

In its recent report dated November 2026, Egan-Jones Ratings Co. sheds light on the state of collateralized loan obligations (CLOs), revealing a continued softness in issuance during October. The data points to 90 CLO deals amounting to $36.7 billion, marking a considerable decline of 25.6% in deal count and 27.8% in volume compared to the previous year.

The report details the broader context by comparing these findings to other financial metrics, specifically focusing on credit spreads and treasury yields. The ICE BofA US High Yield Index option-adjusted spread widened by 14 basis points, reaching 326 basis points, which is still below the highs observed in April 2025. Meanwhile, the 5-year Treasury yield saw a decline of 38 basis points to 4.71%, pulling back from September's peak of 5.09%. In a recent meeting, the Federal Reserve decided to maintain rates within the range of 3.75%-4.00%, despite dissent from two officials seeking a further increase.

Despite the downturn in issuance, Egan-Jones reports that its deal-level credit metrics have remained stable or even improved slightly. The weighted average rating score, indicating credit quality where a lower score signifies stronger credit, has shown advancement over the past year, suggesting a potential decrease in overall default risk. Additionally, the proportion of assets rated CCC+ and below has held steady or slightly decreased.

In the report, Egan-Jones evaluated a total of 1,557 CLO deals, noting significant differences between their ratings and those provided by other agencies. An analysis of 20 specific deals illustrated this divergence: ten where Egan-Jones rated higher and ten where it rated lower. The varying ratings highlighted significant gaps, with some discrepancies reaching up to six notches between Egan-Jones and its peers. For instance, certain tranches may receive an AAA rating from Egan-Jones while being rated A- by another agency.

Among the findings, the report also features a rating review of AGL CLO 20, prominently detailing its largest exposure sectors which include Banking, Finance, Insurance, and Real Estate at a notable 13.7%. The overarching conclusion drawn from the report indicates that while issuance numbers have decreased compared to last year, the credit metrics associated with existing deals show signs of solid performance.

This analysis from Egan-Jones illustrates a critical examination of the CLO market, underscoring the intricate nature of credit ratings and the evolving landscape of financial obligations. As we move forward, it will be essential to continue monitoring these trends to understand the future of CLO issuance and credit quality comprehensively.