CLOs Push Back on Funky Private Credit Tactics in Refinancings

The biggest buyers of leveraged loans are welcoming the return of borrowers to the traditional loan market, but they aren’t embracing every aspect of private credit refinancing deals.

Managers of collateralized loan obligations have been resisting some of the looser terms often associated with private credit, according to people familiar with the matter. While lots of the big unitranche refinancings have already been snapped up by CLOs, there are smaller and lower-rated deals in the pipeline, and CLOs are getting hesitant about features like higher leverage and undrawn credit lines, the people said.

“Not all unitranche deals have a route ...