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How much is the collateralized loan obligation market worth, and how is it expected to expand?
The collateralized loan obligation market size has grown rapidly in recent years. It will grow from $1413.75 billion in 2024 to $1615.41 billion in 2025 at a compound annual growth rate (CAGR) of 14.3%. The growth in the historic period can be attributed to an increasing desire for sustainable investments, an increased number of prospective trading partners, an increase in trace trading, and a growing demand for alternative investment products.
The collateralized loan obligation market size is expected to see rapid growth in the next few years. It will grow to $2718.41 billion in 2029 at a compound annual growth rate (CAGR) of 13.9%. The growth in the forecast period can be attributed to increasing demand for governance-compliant collateralized loan obligations, growing leveraged loan markets, growing private debt, an increase in trace trading, and a rise in the volume of foreign exchange trade. Major trends in the forecast period include innovative technologies, innovation in collateralized loan obligation structures, developments in blockchain and machine learning, technologically-advanced products, and developing regulatory compliance tools.
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How has the collateralized loan obligation market evolved, and what factors have shaped its growth?
The increasing demand for high-yield investments is expected to propel the growth of the collateralized loan obligation (CLO) market going forward. High-yield investments refer to financial instruments or opportunities that offer potentially greater returns than traditional investments, often with higher risk. The increased demand for high-yield investments can be attributed to factors such as low interest rates on traditional savings, investors seeking higher returns, and economic conditions encouraging riskier investments for potentially greater rewards. High-yield investments enhance collateralized loan obligations by providing higher returns, increased cash flow, and diversification, thereby boosting the overall performance and risk-return profile of the CLO. For instance, in July 2023, according to the Bureau of Economic Analysis, a US-based government agency, foreign direct investment (FDI) in the United States surged by $216.8 billion, reaching $5.25 trillion by the end of 2022, up from $5.04 trillion in 2021. Therefore, increasing demand for high-yield investments is driving the growth of the collateralized loan obligation market.
What are the major segments of the collateralized loan obligation market?
The collateralized loan obligation market covered in this report is segmented –
1) By Type: Investment Grade, Non-Investment Grade, Equity Investment Grade
2) By Investor Base: Bank, Asset Manager, Insurance And Pensions, Hedge Funds, Other Investor Bases
3) By Sector: Technology, Healthcare, Services, Financial, Industrials, Housing, Food And Beverages, Paper And Packaging, Transportation, Other Sectors
Subsegments
1) By Investment Grade: Senior Tranches, Mezzanine Tranches
2) By Non-Investment Grade: Subordinated Tranches, Junior Tranches
3) By Equity Investment Grade: Equity Tranches With Investment Grade Rating, Equity Tranches With Higher Yield
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Which companies dominate the collateralized loan obligation market?
Major companies operating in the collateralized loan obligation market are JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc., Prudential Financial Inc., Morgan Stanley, BNP Paribas S.A., Mitsubishi UFJ Financial Group Inc., Deutsche Bank AG, Barclays PLC, BlackRock Inc., Credit Suisse Group AG, Blackstone Inc., Jefferies Financial Group Inc., Ares Management Corporation, Neuberger Berman Group LLC, RBC Capital Markets LLC, Natixis S.A., HPS Investment Partners LLC, Conning Inc., CIFC Asset Management LLC, Brigade Capital Management LP, GreensLedge Capital Markets LLC, Panagram Structured Asset Management LLC
How will evolving trends contribute to the growth of the collateralized loan obligation market?
Major companies operating in the collateralized loan obligation market are focusing on developing innovative collateralized loan obligation structures, such as exchange-traded funds, to optimize risk-return profiles, thereby meeting evolving market demands and investment strategies. Exchange-traded funds (ETFs) are investment funds that allow investors to gain diversified exposure to a portfolio of CLOs, which are structured credit products composed of pooled corporate loans. For instance, in July 2023, Panagram Structured Asset Management, LLC, a US-based company that operates as an investment advisor, introduced two actively managed collateralized loan obligation (CLO) ETFs, the Panagram AAA CLO ETF (CLOX) and the Panagram BBB-B CLO ETF (CLOZ), to provide investors with a liquid alternative to traditional fixed-income investments while capitalizing on the growing collateralized loan obligation (CLO) market. CLOX is designed to focus on AAA and AA-rated CLO bonds, prioritizing capital preservation and delivering consistent monthly income, with an expense ratio of 0.20%. In contrast, CLOZ targets BBB and BB-rated CLO bonds, seeking higher yields while also emphasizing capital preservation, and has an expense ratio of 0.50%.
What are the key regional dynamics of the collateralized loan obligation market, and which region leads in market share?
North America was the largest region in the collateralized loan obligation market in 2024. The regions covered in the collateralized loan obligation market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.
What Does The Collateralized Loan Obligation Market Report 2025 Offer?
The collateralized loan obligation market research report from The Business Research Company offers global market size, growth rate, regional shares, competitor analysis, detailed segments, trends, and opportunities.
A collateralized loan obligation (CLO) is a financial product backed by a pool of corporate loans, often to companies with lower credit ratings. It is structured into various tranches with different levels of risk and return, allowing investors to choose based on their risk tolerance and return expectations.
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