We began our visit to Tokyo this week attending S&P’s Structure Finance Seminar 2025. Along with almost 200 Japanese bankers and investors, we heard senior ratings analysts and leading CLO market participants discuss trends and outlooks for global leveraged finance, CLOs and other securitized strategies. Our panel was entitled, “Private Credit, Middle Market CLOs and Fund Finance.” Here’s a summary of the discussion, with additional color. 

Private credit CLOs have seen a natural evolution. They began as balance sheet financing tools for specialty finance companies. Now they provide attractive financing within a levered fund, typically as replacement for asset-based facilities. 

While CLO technology has been around since the late 1990s, the structures and market have evolved considerably. Just ten years ago, the private credit CLO market was less than $20 billion. With fewer than ten transactions done annually, it was only 5% of the overall CLO landscape. Today PCLOs have grown to $135 billion, or 13% of the market (per Bank of America Global Research). So far this year, PCLOs comprise about 18% of new issue US transactions, and growing as the product and market gain more acceptance.