Investor types

Structured credit investors

Structured credit investors buy tranches of securitised debt, in which pools of loans or receivables are packaged into securities of different seniority. Both the US and European CLO markets set issuance records in 2025.

What structured credit investors are

Structured credit investors buy securities backed by pools of assets. The main instruments are collateralised loan obligations (CLOs), backed by senior secured corporate loans; asset-backed securities (ABS), backed by assets such as auto loans, credit card balances and trade receivables; residential mortgage-backed securities (RMBS); commercial mortgage-backed securities (CMBS); and significant risk transfer (SRT) transactions, in which banks transfer the credit risk of loan portfolios to investors.

These investors differ from private credit funds because they buy rated, tranched securities rather than originating and holding individual loans. They differ from conventional bond investors because they must analyse how the structure works: the order in which cash is paid out, the cushion of subordination beneath each tranche and the tests that protect senior noteholders.

Scale of the structured credit market

US CLO new issuance was US$209bn in 2025 on Deutsche Bank's count (28 January 2026)¹ and approximately US$206bn on the count of Valuation Research Corporation, which described it as the largest year of CLO issuance on record.² US middle-market CLOs accounted for 68 deals totalling approximately US$35.7bn in 2025.²

European CLO new issuance reached €60bn in 2025, up from €49bn in 2024, another record year according to Deutsche Bank.¹

Across all European securitisation, €252.3bn was issued in 2025, an increase of 3.0% on 2024. Of this, €156.3bn, or 62.0%, was placed (AFME, 21 January 2026).³ Pan-European CLOs led the placed total with €60.5bn, followed by UK RMBS with €25.6bn and German auto ABS with €12.9bn.³

Outstanding European securitisation, including CLOs, stood at €1,204.9bn at the end of the first quarter of 2025 (AFME, 11 June 2025)⁴ and €1,253.4bn at the end of the second quarter of 2025 (AFME, 30 September 2025).⁵ In the second quarter of 2025 alone, €78.9bn of securitised product was issued in Europe, of which €39.1bn, or 49.5%, was placed, and quarterly SRT issuance in Europe reached €54.3bn.⁵

Structures and sub-types

The market divides by the assets in the pool:

Broadly syndicated loan (BSL) CLOs.
Middle-market CLOs, which finance private credit portfolios.
ABS.
RMBS.
CMBS.
SRT transactions.
CLO exchange-traded funds.

Each securitisation is also divided by seniority. Senior notes carry the highest ratings (AAA to A), mezzanine notes sit below them (BBB and BB) and an unrated equity tranche at the bottom receives the residual cash flow after the notes, fees and costs are paid. Losses are absorbed from the bottom up, so the equity and mezzanine tranches protect the senior notes.

The issuer is a bankruptcy-remote special purpose vehicle, commonly established in Ireland, the Cayman Islands, Luxembourg or Delaware. Before a deal is issued, the loans are usually accumulated with funding from a warehouse line, a short-term revolving facility provided by an investment bank.

Who invests

The investor base comprises banks, insurance companies, asset managers and CLO equity funds. Investors tend to sort by tranche: banks and insurers favour senior tranches, which carry lower regulatory capital charges; pension funds and credit managers buy mezzanine tranches; and specialist funds, including some hedge funds, buy the equity tranche.

Links to private markets

Middle-market CLOs finance portfolios of private credit loans, so that direct lenders can fund part of their lending in the capital markets. Valuation Research Corporation reports the growing role of private credit and direct lending in the composition of the CLO market, with middle-market CLOs reaching 68 deals and approximately US$35.7bn in 2025.²

How investment decisions are made

A structured credit investment committee relies on three kinds of analysis:

Cash-flow modelling, which stresses default rates, recovery rates, prepayment speeds and interest rates to see how each tranche performs.
Collateral review, which measures the diversity of the pool, its industry concentrations, its average rating and its average spread.
Document review of the indenture, covering the priority of payments and the overcollateralisation and interest coverage tests, which divert cash from the equity tranche to repay senior notes if the collateral deteriorates.

What investors look for and why they decline

Investors look for diversified collateral, deep subordination beneath their tranche, an experienced collateral manager with a long record and structural protections against erosion of the pool's par value. They decline transactions with concentrations in single borrowers, thin overcollateralisation cushions, payment priorities that leak cash to junior holders under stress or inexperienced servicers.

Regulation and governance

In the European Union, Article 6 of the Securitisation Regulation requires the originator, sponsor or original lender of a securitisation to retain on an ongoing basis a material net economic interest of not less than 5%.⁹ The UK has its own equivalent regime.

In the United States, risk retention rules adopted under the Dodd-Frank Act apply to securitisers, but on 9 February 2018 the US Court of Appeals for the District of Columbia Circuit held that managers of open-market CLOs are not securitisers, because they do not originate or hold the loans, and directed that the rule be vacated as applied to them (Orrick, 14 February 2018).¹⁰

European rules are being revised. The European Commission published proposals on 17 June 2025 to amend the EU Securitisation Regulation and the securitisation provisions of the Capital Requirements Regulation (Morgan Lewis, 27 June 2025).⁶ For insurers, the proposed recalibration of Solvency II would reduce the spread risk charge to 0.70% a year for five-year AAA-rated senior simple, transparent and standardised (STS) securitisations, on par with covered bonds (Macfarlanes, 15 January 2026).⁷ Finance Watch argues that the recalibration would increase risk (Finance Watch, October 2025).⁸

Trends in 2025 and 2026

2025 was a record year for CLO issuance in both the US and Europe.¹ Managers also used resets and refinancings to lower the cost of existing CLO liabilities. The pace in the US has slowed in 2026: new US CLO issuance through 31 May 2026 was approximately US$69bn, against approximately US$102bn in the same period of 2025. Resets totalled approximately US$82.0bn against approximately US$100.5bn a year earlier (Valuation Research Corporation, 2026).²

In Europe, Deutsche Bank forecasts €65bn of gross new European CLO supply in 2026, above the 2025 record.¹

Notable structured credit managers

Name	Headquarters or offices	Size, with date
Sound Point Capital Management	New York	More than US$44bn of assets under management, 31 December 2025¹¹
CIFC Asset Management	Miami, New York, London and Philadelphia	More than US$47bn of assets under management, company website, October 2026¹²

Both firms are credit managers with CLO strategies; their figures cover all their assets under management, not CLOs alone.^11,12

How arrangers and advisers work with structured credit investors

Arrangers structure securitisations and place the tranches with investors. In 2025, 62.0% of European securitisation issuance was placed.³ The arranger helps the originator assemble the asset pool, secures warehouse funding, models the structure with the rating agencies and places the mezzanine and equity tranches with institutional credit funds. Anglo-Suisse Capital advises on capital raising, M&A and secondary transactions with professional investors.

Frequently asked questions

Was 2025 a record year for CLOs?

Yes, in both the US and Europe. US issuance was US$209bn and European issuance €60bn, according to Deutsche Bank.¹

How much European securitisation is placed with investors?

62.0% in 2025: €156.3bn of the €252.3bn issued, according to AFME.³

How large is the European securitisation market?

Outstanding volume, including CLOs, was €1,253.4bn at the end of the second quarter of 2025, according to AFME.⁵

Is CLO issuance slower in 2026?

In the US, yes. Issuance to 31 May 2026 was approximately US$69bn, against approximately US$102bn in the same period of 2025.²

What is the EU risk retention rule?

The originator, sponsor or original lender must retain a material net economic interest of not less than 5% in the securitisation.⁹

Will insurers' capital charges on securitisations fall?

Under the proposals, the charge for five-year AAA senior STS securitisations would fall to 0.70% a year.⁷

How do overcollateralisation and interest coverage tests work?

They test whether the collateral's principal value and interest income cover the notes. If a test is breached, cash is diverted from the equity tranche to repay the senior notes.

What is significant risk transfer?

A transaction in which a bank transfers the credit risk on a portfolio of its loans to investors. Quarterly SRT issuance in Europe reached €54.3bn in the second quarter of 2025.⁵

Working with Anglo-Suisse Capital

Anglo-Suisse Capital advises companies, fund managers and shareholders on capital raising, M&A and secondary transactions with professional investors in the UK, Switzerland and internationally.

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Sources

This page is general information for professional investors and is not investment advice. Figures are taken from the sources listed, as at the dates stated.