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And complete the Freshly Squeezed Summer Survey here!

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Ahh back to work. It’s a weird feeling isn’t it? This morning I feel refreshed and raring to write this week’s Freshly Squeezed newsletter after a week off for a wedding in Italy (not my wedding, I was a groomsman). But I also harbour this strange fear that I’ll have forgotten how to do everything I’ve learned in the past few years.

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Alas, it doesn’t seem to be a case of my brain deceiving me as I caught up on last week’s action… For the second week running, there were no deals priced in European ABS.

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CLOs pick up the slack

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However, it’s not all doom and gloom. European CLO managers are certainly not on holiday, with 7 deals pricing last week (including 3 resets).

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All in, continued CLO issuance has meant total placed European securitization issuance has grown to over €82bn (equivalent) for the year so far, while CLOs are just over €36bn, only €9bn shy of the FY2024 total of €45bn.

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To be honest, the CLO market hasn’t really taken a break at all this year. The only slowdown came as threats of tariffs briefly spooked markets in April, which caused a 3-week shutdown. Apart from that, it’s been all systems go with 87 deals priced in 2025.

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What’s been interesting is despite the heavy deal flow, spreads have remained stable. Before April, the market for AAA spreads was broadly in the 120-125bps region, the tightest new issue print was Apollo’s Redding Ridge 24, which priced at 116bps over 3-month Euribor.

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Then after the mini tariff panic, a level was found at around 130-140bps, with the occasional print getting close to breaking 120bps. And in addition, tiering between well-established managers and those with less than 5 CLOs under their belts is very compressed.

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In recent years, during which I covered US and Euro CLOs, there was a sense that one good print could almost drag the market with it and build momentum for rapid tightening, before some sort of geopolitical event would see investors run for the hills.

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As a result, spreads were much more volatile and wider – there was a point in late 2022/early 2023 where AAAs were pricing above 200bps. That steadily tightened toward 150bps in 2023, but now those CLOs that priced at 160-200bps are up for refinancing.

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It’s meant that we’ve seen a glut of issuance but it’s also probably why spreads have remained relatively stable. There are too many managers more than happy to take what’s on offer as every day at 175bps costs money.

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Nevertheless, it’s great to see European CLOs fit and firing. We may have to turn this into a CLO newsletter for next few weeks, so long may it continue!

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Final Word

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Before I get into my Italian escapades, I would also like to point you to the latest report from some of European securitization’s bigwigs.

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PCS has published a report which makes the case for more insurance capital in SRT, titled “Strengthening financial stability through insurance-based Credit Risk Transfer”. The authors are PCS’ own CEO, Ian Bell, Michael Bennet from Arch Insurance, Georges Duponcheele from Munich Re, Tamar Joulia-Paris of IACPM, and Veronique Ormezzano from VYGE Consulting.

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You can read it here on the PCS website.

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And as for my time off, well I think I’ve managed to put on about 3kg in the past 10 days. The Italian diktat is that you simply must have an ungodly amount of carbs with every meal of the day.

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Our trip started in Lake Garda, just a few miles northeast of Milan. There’s some beautiful scenery, hikes, and of course restaurants to enjoy. Then, we headed to the east coast a few clicks south of Bologna to Pesaro for the wedding of one of my oldest friends.

It was a beautiful day, perfect weather and a great way to recharge before deal flow gets back up and running in a couple of weeks.

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Finally, please fill out the survey from last week. We’ve Had some good responses so far, but would love a few more!

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Have a great week!

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Tom

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