CLO performance was mixed in February, with stronger returns in higher-quality tranches while BBB and BB tranches declined as spreads widened. The loan market weakened as sector-specific pressures, tariff uncertainty, and volatility in private credit weighed on prices and risk appetite. Despite softer loan performance, CLO issuance remained solid. Looking ahead, concerns about AI’s potential effect on software-sector credit quality, along with sizable upcoming maturities, could create headwinds later in the year.