Egan-Jones Reports Resilient CLO Credit Quality Despite Issuance Slowdown

The broader market environment remains characterized by historically tight credit spreads, with the ICE US High Yield Option Adjusted Spread hovering near annual lows. Egan-Jones, which currently monitors 1,633 transactions, reports that underlying collateral stability persists, with leverage measures and concentrations of assets rated CCC+ or lower holding steady. Asset and tranche coupons saw a minor decline over the month, aligning with prevailing market conditions.

Egan-Jones maintains a more optimistic outlook than many competitors, frequently assigning ratings one or two notches higher than other agencies. This discrepancy stems from a proprietary methodology that prioritizes estimated losses and aggressive monthly surveillance over traditional peer benchmarks. For institutional investors navigating these conditions, the firm’s latest update provides granular data on tranche subordination and spreads over three-month SOFR to help calibrate risk in a moderating issuance environment.