CLO Private Credit Q&A

Research evidence excerpt

Rishad Ahluwalia AC (44-20) 7134-0254

J.P. Morgan Securities plc

Aram Lavan (1-212) 622-5385

J.P. Morgan Securities LLC

Global Securitized Products

Research

JPMORGAN

16 September 2026

CLO

Private Credit Q&A

Private Credit is drawing attention and we address key topics in Private Credit

CLOs (PCLOs). What is happening in this financing arena? In BDCs, our colleagues

have been surprised by the lack of BDC activity given the spread tightening in their

space, which they think shows that funds are not feeling balance sheet pressure, but have

also been tracking redemptions and non-accruals, which have been getting headlines

(link). In CLOs, PCLO new issue is holding up better than BSL CLO issuance (PCLO

new origination flat y/y (+1%) in the context of less overall US CLO origination y/y

(-19%).

How concentrated is the PCLO manager base? US PCLOs exhibit significantly more

concentration risk when comparing manager AUM to both US BSL and EUR markets.

The top 5 PCLO managers make up more of the PCLO market than the top 10 in the other

two (Figure 1). While this may not necessarily matter to some investors who prefer a

credit selection or portfolio management style, it does beg the question of whether

PCLO issuance can broaden out as much as BSL CLO issuance has.

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What is PCLO issuance and call activity? PCLO issuance has picked up YTD

($25.8bn), with 2026 seeing 22% of US CLO issuance coming from private vs a historical average of 12%. This makes 2026 the third highest year for percent PC/MM of total

US new supply, following 2023 (24%) and 2009 (28%). Compared to the 2y historical

spread differential in the BSL market (-16bp, 119bp current vs 135bp 2y ago), the PCLO

spread differential does not fare much better in encouraging call behavior (-18bp, 145bp

current vs 163bp 2y ago). So just as we’ve seen a slowing in the refi/reset activity in the

BSL market, we may very well see a similar drop in PCLO pace.

What does history tell us about PCLO spread premia? US PCLO AAAs typically

price somewhere between a US BSL AAA and a US BSL AA, with the spread differential over each historically at +39bp and -22bp, respectively. More recently, though,

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