CLO performance was strong in January, with returns positive across the capital stack supported by healthy carry. Loan prices softened due to weakness in software, but overall credit conditions remained stable, and new CLO issuance of about $9.4billion was met with solid demand, particularly for higher-quality tranches. We believe the outlook is favorable. At this time, default rates have remained low, net new issuance is limited and the underlying collateral pools have demonstrated strong performance, all which may indicate that CLOs may continue to offer attractive opportunities as we move further into 2026.

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