Barclays_Global_CLOs_2026_Outlook_Dancing_in_the_Dark

FIGURE 1. 2026 Global BSL CLO Issuance ForecastsFIGURE 2. 2026 Global BSL CLO Spread Forecasts (bp)050100150200250300201420152016201720182019202020212022202320242025YTD2026Est.US BSL New IssueUS BSL Refi/ResetEU BSL New IssueEU BSL Refi/Reset2026 ForecastExcess ReturnsTotal ReturnsCurrent SpreadsAAA1250.9%4.2%119AA1651.0%4.2%155A1850.9%4.2%172BBB2750.8%4.0%250BB4753.4%6.7%460AAA1351.1%3.1%130AA2001.3%3.4%190A2401.0%3.1%220BBB3401.0%3.1%310BB5752.6%4.7%540B9003.6%5.7%840EU BSL CLOUS BSL CLOCLO Spread ForecastsUS values in $bn, EU values in €bnCurrent spreads as of November 2025Source: Finsight, OpenFIGI, Barclays ResearchSource: Barclays ResearchThis document is intended for institutional investors and is not subject to all of theindependence and disclosure standards applicable to debt research reports prepared for retailinvestors under U.S. FINRA Rule 2242. Barclays trades the securities covered in this report for itsown account and on a discretionary basis on behalf of certain clients. Such trading interestsmay be contrary to the recommendations offered in this report.Please see analyst certifications and important disclosures beginning on page 18 .Global CLOs 2026 OutlookDancing in the DarkDespite increasing uncertainties and risks in our inputs, weexpect CLOs to maintain strong issuance at the expense ofspreads leaking slightly wider, with enough reasons to keepthe music going for another year.• The global macro backdrop is strong but increasingly equities-focused/AI-driven, and we•expect corporate credit spreads to widen on the back of increased risks amid a pullback tomedians. We also think CLO demand will need to undergo a shift and be less reliant on non-traditional drivers like weak net issuance and ETFs.• Despite increasing uncertainties, we forecast another strong year of BSL CLO issuance,•with $160bn of new issuance and $200bn of refis/resets in the US, and €55bn of newissuance and €40bn of refis/resets in the EU, driven by increased loan supply and newrecords in open warehouses.• We think that strong issuance will come at the expense of CLO debt spreads leaking slightly•wider in tandem with corporate credit, with US BSL AAAs ending the year at 125bp, and EUAAAs ending at 135bp. Within the stack, we prefer US BBs and EU AAAs.• In private credit, although we do not yet see signs of systemic concerns, we expect continued•scrutiny and forecast $35bn of US PC new issuance and $20bn of refis/resets.The authoring research analyst would like to thank Rushikesh Nalawade for his assistance inconnection with the preparation of this report.FICC ResearchCredit Research3 December 2025SIGNATUREGavin Zhu+ 1 212 526 0668gavin.zhu@barclays.comBCI, USCompleted: 02-Dec-25, 18:04 GMT Released: 03-Dec-25, 12:00 GMTRestricted - ExternalThe Prelude: Get Ready to Keep DancingThe ballad of CLOs in 2025 has been a song of two melodies, marked by a dramatic shift in toneafter "Liberation Day". We went into the year expecting CLOs to let the good times roll, with