Europe’s CLO Market Is Getting Squeezed as M&A Slows Down

Europe’s $300 billion collateralized loan obligation market is grinding to a halt amid a sharp drop in M&A.

Against a backdrop of higher interest rates and sluggish growth, fewer companies and buyout firms are doing big deals, and that means less demand for the leveraged loans that finance them. The value of deals in Europe this year has fallen about 50% compared with the same period in 2022, according to data compiled by Bloomberg.

That’s a big problem for CLOs, which repackage loans and sell them on. Just €29 billion ($32 billion) of leveraged loans have been sold, the lowest ...