Poh-Heng Tan from CLO Research provides observations on recent BWIC Trades of CLO equity particularly the softer CLO equity bids since late 2024/early 2025 and highlighting that not all resets are accretive.

FLAT 2021-1A SUB, a deal from the 2021 vintage, received a cover price of 65.66, implying a 10.2% IRR for primary equity investors—supported by a solid annual distribution of 16.0% since inception. The bond has appeared on BWIC twice previously over the past year, as shown in the table below. Bids were stronger in November 2024 and January 2025, as reflected in higher cover prices and correspondingly stronger primary equity IRRs of 12.3%–12.6% (assuming a primary issue price of 95).

DRSLF 2020-83A SUB, another deal from the 2021 vintage, was reset in May 2024, requiring a $17.52 million equity injection to support the new structure. However, the price at which the additional reset equity was issued was not disclosed. Typically, reset equity is priced in line with prevailing secondary levels to ensure fairness for both original and new equity holders—though this is not always a straightforward process. At a cover price of 35.9, original primary investors would have realised a negative primary equity IRR, given the weak annual distributions and low exit level. This serves as a reminder that not all resets are necessarily accretive.

The next table highlights two more recent deals—NEUB 2023-53A SUB and BALLY 2023-25A SUB—from the 2023 vintage, which completed resets in November 2024 and February 2025, respectively. Both have performed relatively well, generating IRRs of around 10.0% for primary equity investors, supported by strong annual distributions of approximately 16.7% and well-bid cover prices. These bonds rank in the top 28th percentile of 2023 vintage US BSL CLO equity tranches traded via BWIC since July 2024.

On another note, today features a large US BSL CLO equity BWIC list comprising 12 tranches—with a collective notional of $96.2 million—across 11 deals managed by several top-tier managers, which should help shed more light on how CLO equity tranches are performing.

Turning to EU CLO equity trades, OZLME 2X SUB received a cover bid of 37.81, translating to a 7.3% IRR for primary investors—slightly below the median IRR based on fully redeemed deals from the 2017 vintage. BECLO 8X SUB received a cover bid of 41.17, implying a primary equity IRR of 7.9% and placing it in the fourth quartile among 2019 vintage EU CLO equity tranches traded via BWIC since July 2024. The bond was also put on BWIC in late March, where it received a slightly better bid, as shown in the final table.

Source: SCI and CLO Research