While it appears that deal flow is taking a pause in the private credit arena given headlines and market dynamics, pockets of activity do exist, and frustrated LPs may be turning to the non-sponsored market to find alpha.

To be sure, in the competitive sponsor-backed market, spreads have become increasingly tight and now are normalizing in the S+500-525 area, according to market sources. What’s more, oversaturation in some sectors has also given investors pause, leading them to look for new avenues of opportunity.

“The LP community is disappointed that core lending in their books has underperformed and that they’re overexposed to software and SaaS,” said Mustafa Humayun, partner and portfolio manager at Sagard Credit Partners. “They are frustrated and are looking for alpha in credit.”

Cue the non-sponsored market, which is historically not as competitive as the sponsor-backed market.

As such, those types of deals are hard to find, which may be why there’s more upside, sources say.

“The non-sponsored market is a less crowded game,” said Andrew Korz, senior vice president, investment research at Future Standard. “You’re not relying on PE sponsors to do the underwriting. From an asset manager perspective it can be more resource-intensive, but that can potentially lead to higher returns.”

Non-sponsored deals may be more complex, but as a result they can come with greater lender protections, such as personal guarantees from the company founder or owner, according to Korz. “Generally speaking, covenants tend to be more bespoke in non-sponsored transactions,” he said.

Many of the deals in non-sponsored market are founder- and family-owned and the retiring, and aging baby boomer generation is part of the reason there may be more deals coming to market currently, as those businesses are being put up for sale.

As well, many of the types of businesses that are entrepreneur-founded are “old school,” such as manufacturing, business services and consumer products, and therefore are not cyclical or subject to other broader market setbacks.

Yet, there are some trade-offs.

You don’t have the sponsor to make sure things are going well so it’s all hands on deck if things go wrong, Korz noted. “You’ve got to get in there to maximize the value of the loan,” he said.

Another pain point is the length of time it can take for deals to get done. “It may take three to five months to put together a transaction and close, whereas in the sponsor world it may take only a week or two,” said Sagard’s Humayun. “Lenders to non-sponsored companies have to earn their spread,” he said.

While pricing is determined on a case-by-case basis, the non-sponsored market typically comes with anywhere from 100bps to 300bps of extra spread to the sponsored market.

“It’s negotiated,” said Humayun. “Sometimes the spread comes in excess coupon or OID, or through heavy prepayment premiums.”

Krista Giovacco
krista.giovacco@levfininsights.com
+1 917 757 6399

CLO managers are facing the worst new-issue economics in years, with BSL new-issue volume down 21% year over year. Thin leveraged loan supply, compressed spreads and high liability costs are keeping day one equity returns deep in the red, but the market is deploying a suite of countermoves to keep deals crossing the line. Captive CLO equity continues to drive most issuance, but as managers get creative third-party equity investors are starting to find opportunities.

CLO Triple A spreads continue to edge down and are pricing at an average of 121bps currently, according to LFI data. But as leveraged loan spreads are also compressing modeled equity returns remain stuck in the low-double-digit IRR range, according to sources. CLO equity returned negative 10% for day one arb and 11% IRR year to date through mid-May, according to BofA Global Research, which gives investors significant pause on new commitments.

“Equity has often been the limiter for growth of the CLO market; it’s now about access to loans,” explained Alex Danehy, head of US CLOs at Deutsche Bank. “The asset class can’t continue to print record issuance numbers over the long term, which would ultimately result in underperformance.”

Countermoves

Captive CLO equity continues to dominate the market, but investors are finding opportunities deal by deal. To attract first loss buyers, managers can pull several levers, said sources. The most common is a side letter that redirects roughly 5bps to 10bps of the management fee to the equity investor. Another option is a fee holiday, where the manager waives fees from closing to the first payment date. Those savings flow directly into the first equity distribution, the most important for IRR calculations.

Some managers also offer first payment guarantees, effectively collateralizing support against their fees to ensure a minimum initial payout. “The amounts stay modest, but the gesture shows alignment,” said a buysider.

While not purely a countermove, a handful of print-and-sprint CLOs pop up once in a blue moon, and this can result in a windfall for a manager and investors. In March, after the Iran war started, loans traded off roughly a dollar, a handful of attractive print-and-sprint deals emerged from opportunistic managers. Those managers with empty warehouses took advantage and built par, which made the deals more compelling for third-party equity buyers.

12% is the new 15%

The other thing the market is doing to keep deal flow going is recalibrating return expectations. Where equity buyers once demanded 15%-plus IRRs, sources say 11%-13% is now the more common range, given the challenging spread compression on the asset side. With portfolio spreads around 300bps or tighter, it is said to be very hard to think about generating returns north of 15%. “As long as LPs are aware that this is the new regime of spread targets, then the CLO equity machine will continue,” said a banker. “Marketing has become more realistic in this cycle, reflecting that credit is at historic tights across the spectrum.”

While 12% may be the new target, even that reduced level is a push for many managers. A CLO executive explained that getting low-double-digit returns largely depends on manager tier and negotiations: “It really depends on the assumptions used, but equity returns are hard to push into double digits at current creation prices with a mostly secondary ramped de novo portfolio and a low tier-two or less liquid shelf WACC, though low teens returns remain achievable with current tier-one WACC, favorable portfolio costs, resets and subsidies.”

The situation does seem to be improving. According to one banker, recent Triple A tightening has helped pushed modeled returns toward 13.5% in mid-May in some cases, a swing from below 10% just at the start of the month. That could reopen the market to sidelined equity buyers, although some LP buyers, such as pensions and endowments, are said to remain active.

One large CLO ETF fund sees a potential bull case for large, liquid Triple As tightening to 110bps (a level last seen in February 2025) as lower issuance compresses spreads, a floor that could materially improve equity profiles. Other CLO executives say Triple As need to compress even further to the low 100s to significantly motivate third party equity buyers.

Retail capital hunt

CLO equity fundraising is also moving cautiously toward a more balanced mix of institutional and retail demand. Interval funds mixing equity and junior mezz are emerging as the vehicle of choice for that, though most stay small and do not yet drive the market independently, said sources. The open question is whether retail investors will tolerate the liquidity constraints that come with these products, particularly after negative headlines around BDCs. How private credit funds handles that issue will shape the next phase for CLOs also. One skeptic for retail as an outlet for CLO equity said the 10-20 points performance variance between CLO managers makes locked in capital extremely difficult for the asset class, as opposed to a diversified strategy with small positions.

Multiple managers are building interval funds now. Early this month, MetLife’s PineBridge launched an interval fund��, joining VanEck in a push to broaden its investor base beyond institutional allocators. The VanEck CLO Opportunities Fund (CLOIX) is an actively managed CLO investment strategy that invests primarily in equity and junior mezzanine tranches of CLOs of BSLs. “There is interest in interval funds and private wealth distribution as additional sources of demand for CLO equity and related products,” said a CLO tranche trader.

Minority stakes

One dealer reported that half its pipeline involves third-party equity as minority investors. Captive vehicles only need to buy 51% themselves, so they look to place the rest elsewhere, sources said. A few buyers take majority pieces in new-issue deals, but that remains the exception. Roughly one buyer is visible to do true primary majority equity pieces, sources said. Managers have a long-term reason to accommodate outside capital. If they eventually need liquidity on a control position inside a captive vehicle, it helps to have investors who already know the platform and the portfolios. That depth supports future growth.

For control equity, tranche investors say the math doesn’t work, e.g., Triple As would need to reach low 100s to attract interest, said one credit hedge fund CLO tranche trader.

Discerning captive equity

Captive CLO equity continues to support the majority of new deals, but the volume is slowing, said sources. Bain and CVC renewed their captive programs, yet several small and midsize platforms are struggling. One deal lawyer noted some $300mn-$400mn captive raises have seen “diminished” LP interest. “No investor wants to reward low performance,” said sources. “Size matters — large platforms have the advantage of substantial workout teams.”

Performance will determine whether investors back a second fund. Some managers have navigated the environment well; e.g., maybe they missed First Brands but handled software well. Others landed on the wrong side of both those issues and now underperform. That sentiment also holds true for deep-pocketed parents: “No parent company keeps putting good money after bad indefinitely,” sources said.

Many of these captive equity funds carry four-year lives and are sitting roughly two and a half years in, so time remains. But eventually, if follow-on support fades, overall issuance will slow sharply as these unnatural buyers disappear, unless the arbitrage improves, or structures change enough to produce returns that work for third-party equity.

Given the headwinds for captive equity fundraising, cross-platform partnerships are emerging as another important source of equity support to grow a CLO business, said sources. Equity partnerships can help managers address “exit velocity,” which is a challenge, particularly for newer managers that are running out of initial investment funds.

Looking ahead

Investors and bankers expect the modest thaw in May to continue into June, but issuance is likely to remain below trend absent a surge in M&A-driven loan supply or rate cuts. Still, hope remains. The market appears spring-loaded: Natural cash buyers — pensions, endowments, and non-life insurers — continue growing CLO exposure and reviewing deals closely, positioning the market for a snap-back if the arbitrage normalizes.

David Graubard
david.graubard@levfininsights.com
+1 646 361 6095

For much of the market, credit views have traditionally stopped at the issuer level, leaving investors to translate those opinions into decisions on individual bonds. Our new Security-level Recommendations (SLRs) close that gap by delivering precise, bond-level insight that aligns research directly with real-world portfolio decisions.

As Chris Snow, Global Head of Research at ���׶���Ƶ, puts it:

“Security-level Recommendations provide a more direct path from idea generation to implementation. Rather than starting with a research note and then mapping down to a bond, clients can screen our views at the individual security level and move quickly into the research most relevant to the decision.”

Why It Matters

Credit markets move quickly, and clients need research that is easy to act on. SLRs extend ���׶���Ƶ’ established issuer-level recommendations down to individual securities, giving clients greater precision when expressing a view and selecting the bonds that best reflect that conviction.

With our consistent recommendation framework, SLRs can help clients:

• Translate research into implementation: Align conviction with the specific securities that express the view.
• Accelerate relative-value triage: Compare opportunities across structures, maturities, and recommendation types using a consistent framework.
• Identify opportunity sets: Surface patterns and themes across issuers and industries to prioritize deeper work where it matters.
• Strengthen the investment process: Improve consistency in internal discussions, documentation, and execution readiness.

A New Way to Track Opportunities

Behind the scenes, analysts assess opportunities across issuers, maturities, and capital structures, then track and assign recommendations using proprietary tooling.

For clients, those recommendations come to life in the��Secondary Screener, which offers a new way to track opportunities at the security level. Instead of working from a broad issuer view alone, clients can now screen, filter, and compare individual securities in one place to identify the opportunities most aligned with their needs.

Through the Secondary Screener, clients can:

• Screen and filter securities across the recommendation universe.
• Compare opportunities across structures, maturities, and recommendation types.
• Segment by issuer, industry, and instrument characteristics.
• Prioritize the securities most relevant for deeper research and execution decisions.

Designed for Client Workflows

Built on ���׶���Ƶ’ global research footprint of 1,200+ issuers, SLRs provide access to 14,000+ recommendations, helping clients review opportunities systematically and monitor them through saved views and watchlists.��SLRs are available through the ���׶���Ƶ platform and can also fit into broader client workflows via to API once available.

The Bottom Line

Security-level Recommendations give clients a more direct way to move from research views to specific security decisions. Combined with the Secondary Screener, they make it easier to track opportunities, compare bonds, and zero in on the ideas that matter most.

Ready to explore the new SLRs and more? Request a demo below today.

Investment firm SIGNAL focuses on opportunistic credit and special situations across private and public markets in Europe. Co-founder and CIO Elad Shraga spoke to LFI about the degradation of underwriting standards in the private credit space, default rates, and why he is more positive on AI challenging software business models than the rest of the market.

LFI: Given the crises the global economy has been facing, why haven’t we seen an increase in distressed and stressed debt financing over the last few years?

Shraga: Underwriting standards in direct lending have materially shifted over the past three to four years, reflecting a “natural” evolution as the market adapted to changing conditions. After the challenges of early 2022, the sector delivered a strong three-year run, which reduced investor focus on a potential distress cycle and led fund managers to stop actively seeking stressed and distressed opportunities – resulting in limited allocations to that segment…

Navigating the distressed market can feel like trying to price a moving target: new filings hit the docket overnight, a single hearing can reshape recoveries, and crucial details are often buried in hundreds of pages of legalese. For leveraged finance investors and credit teams, the pain is the same: too much information, not enough signal, and not enough time to figure out what actually changes the trade. That urgency came through clearly in our March 19 “US Bankruptcy: Hot topics in bankruptcy 1Q26” webinar, where panelists returned again and again to how quickly documentation issues, liability management exercises (LMEs), litigation, and even venue fights can alter outcomes of distressed credit. That’s why timely, structured coverage matters: to translate court-driven developments into clear, actionable insight from day one through emergence and beyond.

In 2025, ���׶���Ƶ launched dedicated Bankruptcy coverage, powered by LevFin Insights (LFI), focused on Chapter 7, 11, and 15 cases. Until now, we targeted cases with at least $200 million in funded debt, but that universe has now expanded to a lower coverage threshold of $100 million+, significantly increasing the number of restructurings we track. This broader lens is designed to capture the situations investors monitor most closely, particularly as the market digests the knock-on effects of aggressive documentation and LME activity, a theme highlighted during the webinar by Marc Heimowitz and ���׶���Ƶ’ Ian Feng. Practically, this means more day-one launch reports on newly filed cases, more in-the-courtroom coverage across a broader set of hearings, and more consistent tracking of key inflection points such as DIP financing, plan milestones, litigation, and asset sales across a wider restructuring landscape.

What distinguishes our approach is a clear mandate: cover meaningful capital structures in real time, starting the day a debtor files and continuing through emergence, liquidation, and any appeals. Since the initial launch of Bankruptcy coverage, the team has produced more than 1,500 stories covering more than 100 debtors, building an always-on view of how restructurings evolve, where value shifts, and what legal and documentation themes matter most to investors. Those themes are not theoretical. In the Hot Topics in Bankruptcy webinar, the discussion identified the same themes, focused on post-LME bankruptcies, (including Saks, STG Logistics, Pretium Packaging, and Cumulus Media) to how litigation and court rulings can set roadmaps for future disputes.

How We Cover a Bankruptcy Case: The Process, Start to Finish

Day One: The Launch Report

On the first day of any covered filing, our team publishes an introductory report that explains who the debtor is, how it got there, and what comes next. These day-one reports typically include business history and operations, the debt stack and key creditor groups, the path to bankruptcy, and the company’s initial restructuring or liquidation objectives, supported by charts that surface the case’s defining features at a glance.

A recent example is��The Lycra Company, in which our intro report quickly framed the company’s filing around a prearranged restructuring, the key creditor support behind the deal, and the broader business and market pressures that led to chapter 11. The report gave readers an immediate view into the company’s operating background, the major drivers of distress, and the proposed path forward, including how value was expected to be distributed across the capital structure. It also highlighted the role that weakening demand, competitive pressure, trade uncertainty, and legacy issues tied to prior ownership played in the filing. First-day context helps clients move quickly from headline news to a more informed view of what the case could mean for recoveries, negotiations, and market precedent.

That foundation is critical in a market where, as the webinar emphasized, documentation quality and deal terms can drive leverage in negotiations and determine which tools are available once a company hits chapter 11.

The Case Timeline: Filings, Hearings, and Turning Points

From there, our team tracks each case from filing through resolution, covering every significant development as it hits the docket and, when it matters most, from inside the courtroom in real time. That includes DIP financing proposals, asset sales and auction processes, chapter 11 plan negotiations and filings, litigation tied to key disputes, and procedural flashpoints that can shift leverage, value, or outcomes.

This real-time lens is especially important when a judge’s questions, rulings, or courtroom dynamics materially affect the direction of a restructuring. As discussed in the Hot Topics in Bankruptcy webinar, litigation and process issues have become a major focus for investors, whether in disputes over liability management transactions or procedural issues such as venue.

Integrated Court Dockets

Subscribers also have access to fully integrated court dockets directly on distressed company pages, including relevant adversary proceedings, with documents available to download as needed. Our email alerts for new filings on notable cases also help teams monitor fast-moving situations. This is especially useful when disputes spill into adversary proceedings or when LME-related conflicts continue to play out in court.

Bankruptcy Data Workbook

To complement our report and docket coverage, we have published the Bankruptcy Data workbook, accessible within the ���׶���Ƶ platform. The workbook is designed to give subscribers a structured, downloadable view of the bankruptcy universe we track. This��enables easier monitoring of cases, comparison across situations, and analysis of broader market trends.

The workbook will include several core data sets:

• Case-level details: Each company that has filed for bankruptcy since January 2025, including filing date, exit date, case number, court, and judge.
• Lenders & Advisors: Information on the legal counsel, financial advisors, and other parties that provided advisory services to a company during its bankruptcy case.
• Capital structure: All funded debt, including loans and bonds, that a company owed at the time it filed for bankruptcy.
• Rule 2019 disclosures: A subset of the capital structure showing which creditors held which debt positions.

Pairing narrative reporting and real-time hearing coverage with a consistently updated reference tool enables users to screen activity, track diligence, and monitor markets more effectively.

The End of the Case: The “Chapter 11 Bookend”

At the end of a case, we publish a Chapter 11 Bookend that provides a detailed wrap explaining what happened, why, and what the outcome means in context.

A recent example is��PrimaLend Capital Partners, in which our Bookend report showed how the company used chapter 11 to run a sale process, transfer assets to lender-backed buyers, and ultimately confirm a liquidation plan. The report pulled together the key milestones of the case, including the financing that supported the process, the progression of the sale, the structure of the confirmed plan, and the post-emergence mechanisms for distributing value to creditors. It also highlighted an important reality for distressed investors: even when a case formally ends, litigation and related claims can continue to shape the ultimate outcome. By tying together the procedural path, creditor recoveries, and unresolved disputes, our Bookend report gave clients a clear understanding of how the case concluded and what mattered most from an investment and precedent perspective.

As noted in the Hot Topics in Bankruptcy webinar, this type of end-of-case analysis is also where broader market themes often become clearest, including recurring plan issues, litigation strategies, and the practical implications for recoveries and negotiating leverage.

Navigating Distressed Lifecycles

In a market where documentation risk, LMEs, litigation, and even venue can reshape outcomes in a matter of days, bankruptcy is no longer something investors can afford to follow at a distance. Our Bankruptcy coverage is built for that reality, pairing day-one context with real-time docket and hearing coverage, structured data tools, and case-closing Bookend reports that capture what changed, who gained leverage, and why it matters for recoveries and future playbooks. From opening reports like The Lycra Company��to end-of-case analysis like��PrimaLend Capital Partners, and now with the addition of the Bankruptcy Data workbook, the goal is the same: turn court-driven complexity into clear, investable insight.

If you need to stay ahead of the next filing, the next ruling, or the next turning point, ���׶���Ƶ can help turn court-driven complexity into clear, investable insight.

Want access to Bankruptcy insights? Request a demo below to get started.

The leveraged loan market represents a $1.4 trillion opportunity, but the tools investors rely on are often fragmented across research terminals, covenant databases, data rooms, and spreadsheets. Building a complete view from individual sources is time-consuming and increases the risk that important details will be missed.

���׶���Ƶ helps solve that challenge by bringing together the insight, tools, and workflow support loan investors need in one place. From market intelligence and covenant expertise to portfolio analytics, document management, compliance support, and fundamental credit data, ���׶���Ƶ supports the full leveraged loan investment process. And with our new Loan Navigator, accessing those capabilities is easier, faster, and more connected than ever.

Coverage Built for the Realities of Loan Investing

Seeing the full picture in leveraged loans requires more than headline market updates. Investors need timely visibility into new issuance, secondary activity, and the broader trends shaping the market.

���׶���Ƶ helps investors stay close to market activity with:

• Primary loan news and data
• Secondary loan news and data
• A deals screener to track what is coming to market
• Context on broader market trends and activity
• AI-powered credit intelligence leveraging ���׶���Ƶ’ proprietary data

That visibility can make it easier to spot opportunities early and respond with greater confidence.

But market activity is only part of the equation. Understanding what is actually inside documents is just as critical. Through Covenant Review, investors can access trusted covenant analysis and trend research to assess deal protections, identify structural risks, and evaluate documentation more clearly. Our loan comparison tool supports side-by-side analysis of loans and tranches, helping teams review precedents, uncover loopholes, and model distressed scenarios, while loan documentation scoring offers a quick read on the relative strength of loan agreements.

From Credit Selection to Portfolio Perspective

CLO investors also need to look beyond individual deals. Portfolio construction depends on understanding how credits interact, where concentrations are forming, and how risks or opportunities may be building across holdings.

���׶���Ƶ supports that broader portfolio view with tools to:

• Compare CLO portfolios
• Analyze industry exposure
• Identify concentrations quickly
• Monitor portfolio risk and opportunity across holdings

Investors can also draw on comprehensive BSL and CLO data, supported by an interactive CLO database covering more than 2,700 new issues. Additionally, you can access even broader issuer coverage across public and private markets. Together, these capabilities help turn large volumes of portfolio and market information into more actionable insight.

At the same time, deeper issuer analysis remains essential. Public and private fundamental data, call transcripts, and broader loan market datasets help investors evaluate companies in greater detail, compare credits across sectors, and monitor changing fundamentals over time.

Supporting Execution, Compliance, and Ongoing Monitoring

Research and portfolio analysis are only part of the workflow. Loan investing also depends on strong operational controls, disciplined compliance processes, and secure handling of sensitive information.

���׶���Ƶ supports these needs with document management and compliance tools designed to help firms maintain secure, auditable workflows and reduce the risk of mishandling MNPI. Integrated workflow capabilities can also streamline compliance and regulatory reporting, while keeping documents organized and easy to review.

That support extends further when credits become stressed or distressed. Bankruptcy coverage includes real-time court dockets, news, and legal research tailored to the US leveraged finance market, helping investors stay informed as situations evolve.

For firms that want to integrate this intelligence more directly into internal systems, ���׶���Ƶ also offers data feed and API compatibility, providing more flexibility in how loan market data, research, and analytics are accessed and used.

A More Connected Way to Access It All

From market monitoring and documentation analysis to portfolio insight, compliance, and credit event tracking, ���׶���Ƶ offers the breadth of support across the leveraged loan workflow.

Loan Navigator is the latest solution delivering a unified platform that brings together all of these key capabilities into one integrated experience for loan-focused investors. It’s now faster and easier than ever to access the full depth of ���׶���Ƶ loan coverage in a more connected way.

The Bottom Line

The leveraged loan market is only becoming more complex. Investors need tools that help them move faster, see more clearly, and act with confidence. ���׶���Ƶ Loan Navigator is built to meet that need with the market intelligence, covenant expertise, portfolio insight, compliance support, and credit data required to support the full loan investment workflow.

Want to see these capabilities in action? Contact us to schedule a demo and learn how ���׶���Ƶ can support your leveraged loan investment process.

New integrated loan intelligence solution combines market-leading research, covenant analysis and data tools into single platform.

 

NEW YORK — [April 15, 2026] — ���׶���Ƶ, a leading provider of research, analysis, data and news for global credit markets, today announced the launch of Loan Navigator, an integrated solution designed to provide institutional investors with a comprehensive view of the leveraged loan market and help accelerate investment decision-making.

The leveraged loan market is large and fast-moving, yet many investors still rely on fragmented workflows across research terminals, covenant databases, data rooms and spreadsheets.��Loan Navigator��brings together ���׶���Ƶ’ loan intelligence capabilities including: LevFin Insights (LFI), Covenant Review and Bixby into a single, purpose-built workflow for portfolio managers, analysts, traders and credit risk professionals. By unifying proprietary content, expert covenant analysis, deal documentation and portfolio analytics in one environment, the platform is designed to streamline evaluation of new opportunities and ongoing monitoring of risk.

“The leveraged loan market demands speed and precision, but many investors still work across disconnected systems that slow them down,” said��Erin Lyons, Head of ���׶���Ƶ. “Loan Navigator brings together capabilities investors already rely on into a single workflow designed for how teams assess risk and evaluate deals, helping reduce time to insight and supporting faster, better-informed decisions.”

The launch reflects growing demand from asset managers, banks, insurers, and CLO managers for tools that streamline increasingly complex loan market workflows and provide deeper insight into credit risk and deal structures. As investors navigate evolving documentation terms and manage more complex portfolios, the ability to quickly assess structure, risk and relative value has become increasingly important.

Key capabilities include:

• Integrated Market Intelligence: Combines real-time leveraged finance news, primary market tracking, and anticipated issuance from LevFin Insights with Covenant Review’s industry-defining legal and structural analysis, eliminating the need to cross-reference multiple sources.
• Expert Covenant & Documentation Analysis: In-depth evaluation of credit agreements, indentures, and protective provisions, with proprietary documentation scores that benchmark deal quality and identify structural risks other platforms miss.
• Financial Spreading & Portfolio Analytics: Sophisticated analytics engine for spreading financials and analyzing exposures across metrics, sectors, and market conditions, turning raw data into actionable insight.
• Unified Workflow: Single-platform access to research, documents, covenant insights, and analytics, no more toggling between disparate tools or losing context between systems.
• Comprehensive Coverage: Aggregated data and analysis across 10,000+ public and private issuers, providing complete visibility into loan market activity.
• Compliance-Ready Architecture: Secure access controls for restricted information with audit trails and document access reporting to meet regulatory requirements.

The launch builds on ���׶���Ƶ’ long-standing reputation for delivering high-quality credit research and reflects the firm’s continued investment in technology and integrated analytics for institutional investors, bringing together Covenant Review’s institutional-grade covenant analysis with market intelligence and portfolio analytics in a single workflow.

“With Loan Navigator, we’re delivering an integrated experience designed to meet the pace and complexity of today’s loan market,” added Lyons.��“This is the first step in a broader vision to give credit investors the integrated intelligence infrastructure the market demands.”

For further information, visit /loan-navigator/

About ���׶���Ƶ

���׶���Ƶ combines credit market research, covenant analysis, and leveraged finance news into one comprehensive platform to help our clients Know More. Risk Better. ���׶���Ƶ delivers timely and actionable research to institutional investors, enabling them to make informed decisions. Our team of experienced analysts covers a wide range of sectors and regions, providing clients with comprehensive assessments of credit risk and opportunities. With a commitment to excellence and innovation, ���׶���Ƶ continues to be a trusted partner for financial institutions worldwide.

���׶���Ƶ is a Fitch Solutions Company and part of Fitch Group, a global leader in financial information services with operations in 30 countries. Fitch Group is owned by Hearst. Further information: .

��

Media Contact

Eleis Brennan

Tel: +1 646 582 3666

Email: eleis.brennan@thefitchgroup.com

Sub-investment grade tranches of European CLOs have widened in secondary to levels last seen during the spread blow-out that followed April 2025’s Liberation Day.

Average secondary spreads for Single B tranches topped 1000bps DM at the close of last week, and Double Bs approached 700bps DM, per Houlihan Lokey’s CLO spread indices, which track the most liquid bonds in each rating group.

Behind these averages is a significant dispersion between individual deals, which has reached record levels at the bottom of the stack.

Ranges currently span 950-1250bps for deals without distressed Market Value OCs (MVOCs), but go all the way out to 1400bps for deals under more significant pressure, or trade solely on cash prices, say sources.

The MVOC measures the cushion of collateral value available to support debt tranches, should a deal be liquidated.

Trading on MVOC

Much of the deal-level dispersion in Single B tranches stems from portfolio exposures to software companies, whose loan prices have slumped this year on fears of AI disruption.

CLO portfolio allocations to software vary significantly by manager, from close to zero to the high teens, with an average of approximately 7% in Europe.

“CLO portfolios with software exposure at the upper end of the range face greater pressure on their MVOC ratios, which directly impacts tranche pricing in secondary,” said Rondeep Barua, portfolio manager in the Alternative Credit team at Ninety One. “Depending on how a manager has navigated other recent market events, some deals may also be subject to a manager-specific premium.”

CLO managers across Europe have taken differing approaches to AI disruption risk and software. A panelist at this week’s FT Live CLO conference in London commented that some managers opted to “sell first and ask questions later”. Others say they have selectively added exposure to discounted names that they think were oversold.

Other challenged sectors, such as chemicals, plus idiosyncratic problem credits such as First Brands, have further weakened market MVOC levels in late 2025 and early 2026. The emerging energy crisis stemming from the Middle East war is adding another layer of uncertainty.

As a result, an increasing number of CLO Single Bs are now heading into negative MVOC territory. Recent BofA����indicates that approximately 15% of European CLOs now have negative MVOCs, up from 3% in January and almost none in 2025. A “handful” of Euro CLO Double B tranches also have MVOC ratios below 100%.

While a negative MVOC increases that tranche’s price volatility – and even tradeability – it does not indicate an imminent loss for bondholders. Loan prices can recover, and CLO structures contain various cash trap mechanisms designed to protect bondholders.

On this point, the technology segment of the JP Morgan European Leveraged Loan Index has lost 4.86% year-to-date – but so far in March it has gained 1.49% in a partial retracing of its steps.

IG more resilient

Unlike the post-Liberation Day response – in which all tranches across the CLO capital structure widened in a knee-jerk reaction to broad market shock – the latest repricing of risk has been more concentrated in CLOs’ lowest rated tranches.

Triple As, for example, have widened to ~108bps DM on average, compared with wides of ~142bps in April 2025, according to Houlihan Lokey data, while Triple Bs have moved to ~315bps DM now versus 395bps last April.

See also:��

 

Anna Carlisle
anna.carlisle@levfininsights.com
+44 (0)20 7469 0981

In today’s rapidly evolving landscape, AI and Large Language Models (LLMs) are redefining how professionals access information, making it faster and more efficient than ever. Yet, in financial markets where decisions must withstand the scrutiny of investment committees, audits, and regulators, speed alone��������’t enough. Reliable, sourced, and scenario-aware insights are essential.

Human Context is Irreplaceable

At�����׶���Ƶ, we recognized��the transformative potential of AI��and��integrated��our own tool��across our platform in September��2025. AI is a powerful enabler for scale, but the true value in fixed income analysis lies in understanding “what does this mean next?”��This��question demands human context, experience, and inference. While AI can quickly surface information and generate summaries, it is human��judgement��that brings nuance and deep scenario awareness, helping clients interpret implications and risks in complex market environments.��

Covenant Intelligence, Built on Legal Expertise��

Clients often leverage ���׶���Ƶ AI to clarify covenant details such as those in newly issued bonds. A generic LLM may return basic definitions and boilerplate explanations. By contrast, our AI goes beyond the surface because it has been trained and continuously refined by ���׶���Ƶ legal experts with 20+ years of market experience who continue to research and analyze across an increasing breadth of names.��

Instead of merely repeating standard covenant terms,��our��AI��can��flag��nuanced��exceptions in documentation,��and��reference��specific legal precedents and market implications relevant to the issuer’s unique structure.��Additionally,��it��can��highlight areas where the covenant language diverges��from industry norms and��provide��context��how those differences may affect default risk and recovery scenarios.��This depth��������’t��achievable with an off-the-shelf LLM that lacks embedded market intelligence and expert legal input.��

Trusted Data + Human-in-the-Loop: The Gold Standard��

Auditability and traceability are paramount in regulated markets,��especially��in trading and credit analysis. Our��Covenant��Review and documentation analysis��tools��incorporate decades��of legal and market��expertise, codified into our AI models and reinforced through a��“human-in-the-loop” approach. This��ensures quality controls, rigorous��methodology, and traceability—��delivering decision-grade outputs that generic LLMs are not designed to provide.��

Ultimately, in��markets where nuance matters and black-swan events can redefine the landscape, the combination of advanced AI and human intelligence delivers decision-grade insight. Just as a pilot guides��an aircraft��through turbulence, our analysts provide the context and��expertise��needed to navigate uncertainty and complexity,��ensuring��insights are built for��the most demanding environments.��

AI is revolutionizing scale, but human judgement��remains��the cornerstone of credible, actionable financial analysis.�����׶���Ƶ��makes it possible��for your team to move faster without sacrificing rigor, governance, or confidence.����

Human-in-the-loop��isn’t��a buzzword;��it’s��a validation that experience, human reasoning, and inference cannot be offboarded or offshored. This commitment is precisely why�����׶���Ƶ��continues to invest in both best-in-class human talent and best-in-class AI loops, ensuring that every insight is not only powered by technology but also guided by deep��expertise. By combining these strengths,�����׶���Ƶ��delivers rigorous, scenario-aware analysis that meets the highest standards of trust and quality.

Maximize the value of human-in-the-loop research and discover how ���׶���Ƶ AI can empower your workflow today.

Sentiment at the 2026 JP Morgan Global Leveraged Finance Conference was surprisingly positive across many asset classes, and CLOs were no exception. While the ongoing issues with the software sector were a constant feature of discussions, so were the opportunities that lower loan prices could present, especially for CLO equity investors.

The packed conference, which took place in Miami from March 2-4, included a number of CLO panels among the issuer presentations and macro discussions, all dominated by software, the loan sell-off, and what both trends will mean for CLO liabilities in the secondary and primary markets.

“Software continues to be a theme in every conversation, but the message is getting out that CLO market participants shouldn’t use a broad brush to paint the entire software industry the same,” noted Steve Baker, Global Head of CLO Primary at JP Morgan, “The story is much more nuanced across CLO portfolios and there are many strong businesses that can excel with the advancements in AI.”

The market seems to agree with that, with new-issue BSL CLOs currently pushing ahead despite the choppy conditions, albeit pricing at wider levels. Three deals priced this week, with weighted average Triple A at 117-123bps (but note that these are often locked in weeks before the deal prices). CVC achieved the tightest Triple A execution so far this week with senior Triple As at 116bps (117 weighted average).

Looking at the pipeline, a large, liquid manager expects to price Triple As at 116 bps in the coming days, according to sources, but is talked with an OID of 0.5pt on its Triple B notes and 2pts on Double B notes. A newer manager saw its Triple A jump to 125bps Wednesday from 117bps Monday in pre-marketing, then improve to talk of 124bps Thursday morning, said sources, highlighting the current volatility.

The potential downside risk of software was highlighted across the panels, but so were the positive changes that the sell-off in loans could represent. One CLO manager said they had already repositioned their portfolios to be more nimble so they can take advantage of any relative value opportunities. And at least one large manager is said to be pre-marketing a print-and-sprint deal.

The change in market dynamics is especially impactful for investors in primary equity. According to Kris Pritchett, a Partner and Portfolio Manager at Ares, “CLO equity has had a rough couple of years, but today it is starting to look interesting again. You can now build a portfolio of loans considerably below par, while liability costs are close to multiyear tights.”

It ������’t just the day one arb that’s benefiting from the shift in market dynamics, but also longer-term return projections. “We’re starting to see some signs of life, with Triple As in the 122-123bps area.” noted Mike Nespola, senior portfolio manager and head of US CLO portfolio management at CIFC, “We can now model in flat loan spreads, maybe even some future widening, which also helps projected equity returns.”

The impact on existing CLOs is more nuanced, especially in the lower mezz. “The average CLO exposure to software is 15%, so it’s a widely held sector,” said Steve Page, a managing director at Barings. “Some analysts are suggesting a third of software names could default. But even if that happens, and even if the recovery is zero, most Double Bs are going to be able to withstand that. There is downside protection within the structure, but it doesn’t mean spreads aren’t going to go wider.”

Another investor pointed to CLO Double Bs in the secondary market as being a potentially interesting trade as they start to reach the low-90s, albeit one with a definite credit risk.

Secondary equity is an even more challenging place, but as one investor reminded their audience, part of the problem there lies in the widespread adoption of MVOC as a shorthand for equity valuation. Absent a default or LME, loans remain a par value product, and looking at secondary equity through that lens can give a very different valuation than MVOC.

Tom Davidson
thomas.davidson@levfininsights.com
+1 646 943 6231