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Asset-Backed Finance

Funding Circle inks £300m forward flow deal with TPG Angelo Gordon and Barclays

SME finance platform reports growth from newer products as businesses prioritise cash flow management

Funding Circle has inked a £300m forward flow agreement with TPG Angelo Gordon and Barclays, aiming to strengthen the platform's funding position in the UK amid a shifting demand towards more flexible financing solutions.

"We are excited to extend our partnership with Funding Circle to help drive well-needed funding to UK SMEs. This transaction demonstrates our ability to deliver customised capital solutions for leading non-bank lenders," says Sunil Kothari, head of European ABS and md of structured credit and specialty finance at TPG Angelo Gordon.

According to Dipesh Mehta, cco at Funding Circle, the renewal comes at a moment when there is a shift in how small businesses are seeking finance, with companies prioritising working capital management over long-term investments. 

"Against what continues to be a challenging macroeconomic backdrop, we're seeing a significant focus on working capital management," he says, adding: "While long-term investment remains a constant, the immediate priority for many businesses is expertly managing their day-to-day cash flow. They need more agile, on-demand tools than a traditional loan can offer."

As of the end of June, Funding Circle noted the firm had more than £1.6bn in forward flow agreements, covering up to 94% of the group's loans under management. 

Mehta highlights that Funding Circle works on a "highly capital-efficient" model. “It continues to attract strong demand from institutional investors because of our track record of delivering attractive and stable returns,” he notes.

This trend is also driving growth in Funding Circle's newer products, including FlexiPay and its Cashback Credit Card, which saw 119% revenue growth in the first half of 2025, according to the company’s H1 report. These credit products are funded from the company's own balance sheet through a £230m facility with Citi, and focus on providing flexible lines rather than fixed-rate terms.

Mehta sees a rising demand for credit among SMEs as a key driver of growth. "We saw a 21% growth in credit extended in the first half of the year, reflecting broad-based demand from across the SME landscape,” he says. 

The deal builds on momentum from last week’s £750m renewal financing with Waterfall Asset Management and BNP Paribas, part of Funding Circle’s push toward a £3bn total financing milestone.

That transaction highlighted the platform’s appeal to institutional investors seeking exposure to SME credit, with Waterfall’s head of Europe James Cuby noting the “continued opportunity in an underserved market” and underscoring Funding Circle’s track record in enabling access to this asset class. 

Funding Circle’s funding model provides stability in a market where access to capital has become increasingly important, from “the local coffee shop to a growing manufacturing firm,” according to Dipesh Mehta. 

Marina Torres

Asset-Backed Finance

CFOs and RNFs drive record private credit issuance in 2025

Carlyle AlpInvest CFO highlights growing investor demand and fund finance market sophistication

The August closing of Carlyle AlpInvest’s US$1.25bn publicly rated GP-led collateralised fund obligation (CFO) reflects the growing sophistication and investor appetite in private credit in 2025. Advised by Ropes & Gray, the deal is the largest publicly rated GP-led CFO to date and comes amid an unprecedented surge in private credit issuance, with rated note feeders (RNFs) and CFOs hitting record levels, according to KBRA.

“In the past year, Carlyle AlpInvest has closed two CFOs that, at the time of closing, were respectively the largest GP-led CFOs in the market to date. The investor appetite for these products - US$2.25bn in aggregate – speaks volumes as to not just the market demand for these products, but also the importance of being innovative in successive offerings to meet the needs of investors whose own considerations evolve over time,” says Lindsey Goldstein, asset management partner at Ropes & Gray.

The transaction features a multi-tranche structure with senior and mezzanine layers backed by LP interests in private equity and credit funds. By combining robust liquidity solutions with investment-grade protections, the deal is another example of how sponsors are using fund finance tools to optimise returns and access a broader pool of capital.

“We’re seeing pronounced interest in CFO transactions from our clients. They can be an incredibly useful fundraising tool, allowing sponsors to offer, at a large scale, a product that is attractive to a wide spectrum of investors, including those that otherwise would be difficult to access for certain asset classes without the CFO structure,” explains Goldstein.

Comparison with Coller Capital’s CFO precedent 

The Carlyle AlpInvest deal follows the precedent set by Coller Capital’s landmark CFO, which drew widespread interest across private credit and insurance markets. 

Yet, according to Ahmet Yetis, senior md in Evercore’s private capital advisory group, these deals reflect two distinct approaches. 

The AlpInvest transaction was broadly syndicated, attracting more than 20 investors, while Coller Capital’s deal was concentrated among just two or three anchor backers. 

The AlpInvest deal was also publicly rated and modelled on Bloomberg, while Coller’s was privately rated. 

On the asset side, AlpInvest structured a 'hybrid' CFO, with an underlying portfolio combining commitments to brand new funds and seasoned assets specifically sourced to seed the CFO, whereas Coller’s CFO was backed almost entirely by commitments to new blind-pool funds. 

Finally, execution diverged as well: AlpInvest’s deal was upsized during syndication and closed at US$1.25bn in a single tranche, while Coller’s deal required multiple closings to reach its final size.

Record issuance reflects broader market trends

According to a new KBRA report, private credit issuance has surged in 2025, with RNFs totalling US$9bn and CFO issuance reaching US$16bn through early September, surpassing all previous annual records. Full-year projections anticipate totals above US$13bn for RNFs and US$20bn for CFOs.

Investors are increasingly drawn to multi-tranche RNFs, with nearly half of 2025 deals featuring three or more rated debt tranches, up from just 7% before the second half of 2024. 

KBRA notes that rating stability has remained strong, with no downgrades recorded this year and six tranches upgraded as funds matured and de-levered. Cashflow resilience and structural protections - including contractual amortisations, liquidity buffers and credit enhancements - continue to support investor confidence. 

KBRA analysts anticipate continued growth in evergreen fund investments, multi-tranche RNFs and CFO structures with exposure to a diverse range of collateral types. 

“CFOs use a multi-tranche structure to attract a wide range of investors. Investors who tend to be risk-averse, such as insurance companies, gravitate towards the investment-grade senior tranches, while those seeking higher returns may opt for the equity tranches,” explains Matthieu Wharmby, finance counsel at Ropes & Gray. 

He continues: “If the LTV ratio rises too high, cash is retained within the CFO to ensure payments can be met. Additionally, CFO issuers usually have access to a NAV-based revolving liquidity facility for temporary cash needs and are required to maintain a minimum cash reserve in an account on an ongoing basis.”

As KBRA notes, the combination of record issuance, structural innovation and fund finance sophistication underscores the growing role of RNFs and CFOs in private credit markets.

Marta Canini

Capital Relief Trades

Q4 pulse

SRT market update

The SRT market continues to experience a significant pick-up in activity, with market commentators highlighting several key factors.

One SRT investor particularly associates the upturn with the latest legislative developments (“Securitisation Package”) published in June 2025 by the European Commission, noting that the proposed regulatory changes have triggered “strong tailwinds”. They add: “We are seeing more activity from new banks as well as banks that have just started (their SRT platform) who are further increasing their issuance, which naturally is a really good sign.”

Analysing the current spreads dynamics, sources generally report that spreads have remained relatively flat throughout the year. However, there is a, perhaps familiar, feeling they may widen slightly due to the (characteristic) expected increase in issuance for Q4.

Regarding capital allocation, a notable trend is the preference for experienced managers with a proven track record. The SRT investor highlights that it is becoming increasingly difficult for new entrants to establish themselves in the space, stating, “people who are trying to set up now are struggling more because they don't have a track record and people who allocate, generally speaking, prefer to go with more experienced managers.” This is part of a broader industry focus on deepening relationships rather than broadening the number of managers an allocator works with. However, the investor does note that “this is a general trend, not SRT specific. In most private market strategies, you are seeing this trend towards fewer relationships, but more meaningful relationships.”

Another structural element discussed is the secondary market. Commenting on this segment, the investor states, “there isn't very much in the secondary market” and that it is “not meaningful.” The limited activity that does occur, such as a BWIC, is often for purposes like obtaining a pricing indication or transferring assets between a firm's own funds rather than for a genuine sale.

Looking beyond traditional loan portfolios, CRE is an asset class poised to become a more significant part of the SRT landscape in the coming one to two years. Following a period where many banks faced problems with their CRE books due to rising interest rates, there is now more stability and pent-up supply awaiting. As the source explains, with some stability and clients being re-rated, there will likely be “more supply” and “more demand” for CRE-backed SRTs.

Finally, looking at jurisdictional trends and momentum, the investor hints that a few large banks who have been quiet so far are just now coming to market, specifically some from France and the UK.

Vincent Nadeau

Asset-Backed Finance

NatWest and BBB back £100m SME lending facility

ENABLE Guarantee programme supports 4Syte's asset-based and invoice finance growth with streamlined single-funder structure

NatWest and the state-owned British Business Bank (BBB) have finalised a funding facility of up to £100m to support SME lending by finance provider 4Syte, utilising the government’s ENABLE Guarantees programme to share risk. The deal, announced on 18 September, will expand 4Syte’s invoice finance and asset-based lending for smaller UK businesses, doubling the firm’s funding headroom.

Under the structure, NatWest provides senior financing while the BBB guarantees a portion of the exposure.

“This is the first time we’ve guaranteed NatWest’s invoice finance team, and we hope it sets a template,” says Mike Strevens, md for structured financial institution solutions at the British Business Bank. “The facility differs from typical market practice, as a £100m plus ticket would usually be syndicated across three or four funders. Having a single funder reduces administrative complexity and makes it operationally easier for 4Syte.”

The ENABLE Guarantee enables the facility to maintain a standard invoice finance structure, with 4Syte originating and servicing loans while retaining risk on the underlying SMEs.

“Structurally, the guarantee sits with NatWest, not 4Syte, so the transaction can look as close to market-standard as possible while still benefiting from the credit support,” explains Strevens.

The BBB reviewed 4Syte’s historical performance and strategic planning before concluding that the facility size was sensible for their first use under the programme. “We also assessed the balance between invoice finance and asset-based lending” says Strevens.

“Across the programme, we encourage innovation when it benefits the market, while ensuring that any shift in focus, such as moving from primarily invoices to more ABL, is supported by the lender’s underwriting capabilities and track record. Our goal is to help lenders grow responsibly while maintaining robust credit standards.”

For SMEs, the benefit extends beyond liquidity. “Invoice finance companies take on the servicing of invoices, which improves the speed and likelihood of payments,” he adds. “That can reduce dilution rates and strengthen the credit quality of smaller businesses, allowing them to focus on growth rather than chasing receivables.”

Nick Sellars, group managing director of 4Syte, describes the facility as “a commitment from the British Business Bank, NatWest and 4Syte to the SME sector and its vital role in driving growth across the UK.”

The transaction also aligns with NatWest’s push into structured corporate ABL. “We are delighted to continue supporting 4Syte’s growth aspirations through the extended provision of our back-to-back ABL facility,” notes Martin Noakes, head of UK structured finance at NatWest.

While the ENABLE programme has been deployed in other contexts, the structure is seen as replicable for further SME-focused invoice finance and ABL.

More widely, the ENABLE Guarantees programme can also be used to support higher advance rates and free up balance sheet capacity.

“As more lenders see this model, we hope it encourages broader participation in SME finance,” says Strevens.

The BBB has recently partnered with Avellinia Capital to expand funding access for UK fintech lenders and asset originators. Additionally, the state-owned bank has been active in significant risk transfer deals, including a £300m ENABLE Guarantee transaction with merchant banking group Close Brothers in August.

Marta Canini

Capital Relief Trades

Regulatory roadblock: unlocking non-life (re)insurance companies' participation in the EU SRT market

SUERF policy note calls to discard outdated banking metrics

The integration of the non-life (re)insurance sector into the European Union's SRT market requires policymakers to adopt a more nuanced regulatory perspective, according to the authors (Ian Bell, Michael Bennett, Georges Duponcheele, Tamar Joulia-Paris, and Veronique Ormezzano) of the new SUERF Policy Note 375: Insurance-based Credit Risk Transfer: a resilient risk-bearing capacity untapped in the EU.

The note acts as a critical call for regulatory clarity, arguing that insurance SRT’s full potential remains unrealised in the EU, given the current STS collateral requirement regime. The authors argue that because the banking and non-life (re)insurance business models are fundamentally distinct, regulatory criteria must “appropriately account for the distinct business models” to ensure financial stability is genuinely enhanced.

Sitting at the core of this reflection and demonstration is the suggestion that a gross written premium (GPW) test might be a more stable metric than total assets for the minimum size safeguard. Indeed, a major technical contention centres on the metrics proposed for determining a non-life insurer’s eligibility to participate in the market. Regulators currently propose using Total Assets, a metric the authors deem “inappropriate and unstable.”

The fundamental flaw, they state, is that Total Assets are highly volatile and susceptible to sudden, sharp declines following a major event. “Total Assets can decrease sharply following a major catastrophic event,” such as a natural disaster. Such a sudden drop could temporarily disqualify a solvent insurer, undermining market capacity precisely when it is needed most.

GWP is a superior indicator because it “genuinely represents an insurer's market weight and risk appetite,” unlike Total Assets, which are subject to immediate, significant depletion by major tail risks. For regulators aiming to establish a robust framework, the message is that the criteria must be sector-specific: “regulators must consider the specific business model of the non-life insurer, rather than applying a traditional metric designed for banks or life insurers.”

Another suggestion or example concerns looking across to the US market. In this context, the US market, which intentionally includes both capital market investors and insurers, has proven its worth as a certain blueprint for resilience. Pointing to the COVID-19 crisis, the authors note that while “cash investors temporarily withdrew from the market, insurers remained present,” affirming that this multi-participant model is vital for financial stability. Fundamentally, policymakers must discard the notion that insurers introduce instability.

On the topic of (in)stability, the European Systemic Risk Board (ESRB) had previously flagged potential systemic risks associated with insurer participation in the SRT market. Reviewing the technicalities of this position, a critical conclusion emerges: the ESRB’s initial concerns appears to be outdated. The ESRB's position was predicated on a regulatory understanding that may no longer apply, specifically concerning the credit quality standards for protection providers. This earlier concern was rooted in “Article 249 of CRR²,” which required stringent credit ratings. Based on this technical evidence, ESRB’s concerns appear to be not applicable to the current regulatory environment, CRR3.

Overall, the guiding message of the note is unambiguous: allowing non-life (re)insurers to participate appropriately in SRT does not introduce instability; rather, it is a crucial, underutilised mechanism for diversifying credit risk away from the banking sector. The note's analysis, rooted in the technical flaws of the Total Assets metric and the outdated legal interpretation of the SRT framework, demonstrates that the current regulatory structure—specifically concerning synthetic STS securitisations—is unnecessarily hindering European competitiveness.

Vincent Nadeau

CLOs

Orrick poaches eight-partner CLO team from Cadwalader

High-profile hires across London and the US mark Orrick's bid to expand its CLO and structured finance practice

Orrick is hiring an eight-person CLO team from Cadwalader Wickersham & Taft, an industry source has confirmed to SCI. It is understood the team may grow in London and the US, marking a major move to build out the firm’s structured finance practice.

The hires in London include partners David Quirolo, Claire Puddicombe, Alex Collins and Daniel Tobias, whilst in the US the spree includes Gregg Jubin, Joe Beach, Nate Spanheimer and Skyler Walker.

Although Cadwalader declined to offer specifics on the destination of the departing team members, a spokesperson from the law firm told SCI: "We wish our departing colleagues well. Cadwalader remains on track to have one of its best years in the firm’s history and we continue to be bullish on our growth strategy."

Quirolo joined Cadwalader in 2014 from Ashurst and is also part of the Loan Market Association having a say in regulations affecting the CLO market.

Meanwhile, Collins joined Cadwalader in 2017 from Allen & Overy whilst Puddicombe has been at the firm for a decade.

Tobias has spent his entire career at Cadwalader representing arrangers, collateral managers and warehouse finance providers in connection with a variety of European CLO 2.0 transactions and loan warehouse facilities.

In the US, Jubin is managing partner of Cadwalader’s Washington DC office, whilst Beach, Spanheimer and Walker are Charlotte based, all having spent over a decade at the law firm.

Alongside the partners, it is also said that a number of associates will also join Orrick from Cadwalader.

Orrick declined to comment further.

Orrick provides services in the structuring, execution and sale of all securitised assets including esoterics, commercial mortgage-backed, residential mortgage-backed and asset-backed securities, as well as CLOs, repackagings, resecuritisations and other financings.

Ramla Soni

CLOs

CLOs steps out of manual era as Octaura modernises BWIC trading

Octaura's new CLO trading platform looks at modernising BWIC trading through a digitised "list" trading protocol

The CLO secondary market has long been plagued by efficiency and transparency problems, inhibiting its ability to scale, but electronic trading specialist Octaura hopes to change that with its new platform aiming to modernise CLO secondary trading.

Last week, Octaura launched its multi-protocol electronic trading platform for CLOs, looking to “remedy structural issues” and unlock new growth in the CLO secondary market. The firm says the trading portal will provide market participants with Octaura’s proprietary real-time trade and price data alongside a streamlined workflow to help improve market execution on both the buyside and sellside.

The new platform which is a natural extension of Octaura’s existing syndicated loan platform, includes three trading protocols: bilateral, request for quote (RFC), and lists. Lists is slated to help with the manually intensive processes involved with trading Bids Wanted in Competition (BWIC).

Brian Bejile, ceo at Octaura, highlights the importance of the RFQ and bilateral protocols but adds that the true impact of the new platform will be delivered through its modernisation of the list trading process.

He tells SCI: “We expect lists to have the biggest impact – especially when it comes to BWICs - because it aligns with current trading practices but delivers significantly more efficiency gains.”

Bejile notes the platform also boasts enhanced post-trade transparency made possible through the use of “full bid stacks, execution status by line item, and historical BWIC data, along with embedded real-time trade information, yield tables, and analytics. This gives both buy- and sell-side participants a consistent, automated market view that is unmatched by manual processes.”

The firm highlights its partnership with Moody’s to build out the platform's analytics suite and for improving price discovery and comparability across deals. This partnership includes providing advanced price and yield tables to support more informed pricing and risk decisions.

Bejile says the partnership will be vital in building investor trust and consistency required to scale CLO secondary trading, adding that the platform’s protocols will support new levels of transparency being advocated for by market regulators.

“We are closely following the regulators and are aligned with the thinking that structured finance can have greater transparency. CLO trading in particular has historically lacked transparency, which is why our team at Octaura continues to be passionate about addressing these challenges,” he explains.

Looking forward, Bejile tells SCI he aims for the platform to both meaningfully increase secondary CLO liquidity as well as making existing volumes more efficient. “By digitising workflows, streamlining BWIC processes, cutting execution times, and automating post-trade colour, Octaura’s CLO platform currently makes secondary CLO volumes more efficient.”

“We are also congruently building the network to expand trading activity with over 50 buy-side firms and a dozen dealers already onboarded. The CLO platform unlocks access to deeper liquidity pools as the network expands, enabling broader participation and more frequent trading,” he adds.

Solomon Klappholz

RMBS

USS debuts with Summerhouse 1

ERM securitisation introduces new structural features to the UK market

Universities Superannuation Scheme (USS) last month completed its first sponsored securitisation, Summerhouse 1. The £411.6m equity release mortgage (ERM) RMBS – which was privately placed – is one of the few ERM securitisations to gain public ratings and introduces new structural features to the UK market.

Summerhouse 1 comprises six classes of notes, backed by a portfolio of UK ERM loans originated by More2Life between 2019 and 2023. Pursuant to the mortgage sale agreement, the underlying portfolio of loans will be sold by USS-owned Slatewood Financing to the SPV.

Reserve funds are a key aspect of the deal, designed to address the misalliance between unscheduled mortgage cashflows and the scheduled note payments. The primary innovation sits with the various different reserve funds and the way in which they operate. For example, Summerhouse has a reserve that traps collections in a scenario where the portfolio is running off faster than anticipated.

USS was advised by Five Sigma Finance, a London-based fintech company that helps investors structure and manage structured credit transactions, including assisting in the structuring and execution of this transaction. “We worked quite closely with the investor base, with the structure being ultimately well received by both external investors and the sponsor,” comments Alexander Pluckrose, private credit analyst at Five Sigma.

Whether these kinds of structural features become standard market practice in the ERM space is yet to be seen. However, Five Sigma emphasises that they “help to mitigate the risks associated with ERM assets and the creation of Matching Adjustment cashflows.”

Investor appetite in the sector is evolving, particularly around the divergence between Matching and Non-Matching Adjustment cashflows. “The securitisation market, whether it’s public or private, is going to satisfy a particular need from the insurance companies on two levels,” notes Steve White, co-founder of Five Sigma. “One level is the creation of Matching Adjustment notes which satisfies insurers’ requirements to own assets that meet their long-term obligations. The second level, and a still developing market, is for finding a better home for the Non-Matching Adjustment notes … and the securitisation market allows for that bifurcation of the two investor bases.”

The transaction is one of only three ERM securitisations to gain public ratings from both ARC Ratings and Moody’s since December 2024. Indeed, one of the challenges posed by bringing the deal to market was getting the rating agencies comfortable with the structure’s complexity relative to previous ERM transactions.

Ensuring the rating agencies’ and investors’ confidence in the proper functioning of the securitisation was critical. Hence the appointment of Five Sigma as portfolio monitoring agent to oversee the transaction post-closing through the onboarding of the securitisation onto its proprietary platform ABIDE.

Looking ahead, Summerhouse 1 is expected to serve as a platform for future issuance. “One of the primary goals of the Summerhouse 1 process, aside from good execution for the sponsor, was to create a platform upon which to build future transactions,” comments Michele Bisceglia, ceo and co-founder of Five Sigma. That could include tapping the existing structure or launching a Summerhouse 2 transaction, depending on market conditions.

USS partnered with Scottish Widows on the debut deal. “We continue to look for opportunities to partner with other like-minded investors in investment grade credit opportunities,” confirms Eamon Ray, head of private credit and alternative income at USS.

Matthew Manders

ABS

Further spread compression opportunities 'limited'

Fund managers highlight firm technicals and resilient performance

The European ABS/MBS market continued to benefit from strong demand in August, despite a quieter month for issuance, with monthly fund factsheets monitored by SCI highlighting firm technicals and resilient performance. High-quality transactions across the auto, CMBS and RMBS sectors attracted oversubscription, although asset managers cautioned that tighter valuations and macro uncertainty limit room for further spread compression.

TwentyFour Asset Management described August as a constructive period, noting that “the demand technical continued to support spread performance in ABS markets.” While primary issuance slowed, momentum continued in areas such as RMBS and CMBS, with Blackstone’s €1.54bn UK holiday park transaction (Caister Finance) notably pricing triple-As at 1.35% over SONIA.

Fund managers at the firm pointed to healthy demand in Germany, where the triple-B tranche of Bank11’s €400m auto deal (RevoCar 2025-2) was seven times oversubscribed. TwentyFour continues to see most value in senior bank-issued ABS, with spreads expected to remain firm through September.

Amundi also highlighted renewed momentum, reporting that post-summer primary activity “resumed slightly earlier than in previous years… [and] investor reception was excellent.” The firm participated in two deals towards the end of last month, comprising French auto lease and German auto loan collateral, both of which priced with tightening spreads.

The year-to-date issuance of €56.6bn was noted as “slightly lower than 2024, which was a record year, but above the previous 15 years.”

Amundi flagged that there is some selectivity among investors, who are less inclined to give up part of the credit premiums for managers perceived as less solid or liquid.

Similarly, Aegon described August as another stable month, stating that “spreads in European ABS markets moved sideways to tighter during the month.” Investor demand was again high, with tightening especially down the capital structure with mezzanine bonds outperforming seniors. However, the firm noted that “with valuations tighter… there is limited upside for spreads and risks are to the downside.”

Aegon fund managers pointed to broader macro risks, adding that although European ABS tends to be more protected from volatility, it is not immune to risk.

Looking ahead, TwentyFour is prioritising established issuers and senior exposures, Amundi remains active but emphasises investor discipline and Aegon stresses the importance of carry as the primary driver of returns. Across the board, demand for European ABS remains strong, but managers warn that risks are skewed to the downside and credit selection will remain crucial.

Aegon European ABS Fund returned +0.68% in July 2025. YTD: 4.67%
Fund size: €297.50m ABS/MBS allocation: 51%

Amundi ABS returned 0.27% in August 2025. YTD: 2.32%
Fund size: €1.06bn ABS/MBS allocation: 94.09%

Janus Henderson ABS Fund returned +0.55% in August 2025. YTD: 3.71%
Fund size: £593.99m. ABS/MBS allocation: 55.99%

TwentyFour AM Monument Fund returned 0.49% in August 2025. YTD: 3.91%
Fund size: £2.575bn. ABS/MBS allocation: 58.89%

Matthew Manders

CLOs

CLOs emerge as private credit's resilient outperformer

IQ-EQ highlights diversification, liquidity, and innovation – from active risk management to the rise of ETFs – as key drivers of the asset class's continued strength

CLOs have continued to prove more resilient than other parts of the private credit market, thanks to structural diversification, liquidity, and the active management style of their managers. For Joanne McEnteggart, global head of debt, capital markets and corporate at IQ-EQ, these factors explain why CLOs have consistently delivered lower default levels and stronger performance, particularly since 2018.

Private debt managers typically focus on lending directly to mid-market borrowers within specific sectors, drawing on specialist expertise. CLOs, by contrast, operate on a much broader scale. Portfolios often include 150–300 loans, enabling managers to diversify exposure and respond more quickly to underperformance.

Speaking to SCI, McEnteggart, who was appointed to her role last February, says: “CLO managers are constantly monitoring loan performance and modelling the impact of portfolio changes. If a loan or sector shows weakness, they have the flexibility to offload it and reinvest in stronger paper. That level of daily oversight makes CLOs more proactive in managing risk.”

This liquidity and flexibility have also allowed CLO managers to adapt to external shocks. Geopolitical events, tariffs, and supply chain disruptions have all prompted managers to shift exposures rapidly across sectors, ensuring portfolios remain balanced.

Beyond diversification, CLOs benefit from guardrails that prevent excessive concentration and systemic risk. Concentration limits and eligibility criteria are tightly monitored, while rating agency oversight and tranche structures align manager behaviour with investor protections.

McEnteggart eliminates suggestions that underwriting standards in CLOs have weakened. “I don’t see underwriting standards deteriorating,” she notes. “Managers are highly skilled, and their investment decisions are based on sophisticated modelling and borrower-level diligence. The fact that they can move faster than banks doesn’t mean corners are cut – it often means they can negotiate better margins for investors.”

Refinancing dynamics and democratisation through ETFs

Looking ahead, refinancing will be a key theme in 2025 as large volumes of private credit approach maturity. While some borrowers face pressure from higher tariffs or increased supply chain costs, McEnteggart argues that liquidity remains plentiful across institutional investors, pension funds, insurers, and wealth managers.

“There’s no shortage of capital,” she explains. “The challenge is not whether refinancing can happen, but whether it can be done at a level that borrowers find attractive. In some cases, companies will simply have to pay more to secure new financing.”

The rise of CLO ETFs is also reshaping the market, expanding access to an asset class traditionally dominated by institutional investors. The trend has been most pronounced in the US, but McEnteggart sees Europe as an important area of future growth.

“CLO ETFs are democratising the asset class,” she says. “They allow wealth managers and retail investors to access the spreads and diversification benefits that institutions have long enjoyed. Given the strong performance of CLOs in recent years, it’s no surprise to see demand for ETF structures growing.”

Large banks, private equity firms, and private debt managers are increasingly launching CLO ETFs to complement their existing platforms. According to McEnteggart’s this reflects not just innovation in distribution, but also the strength of underlying CLO performance.

With refinancing activity set to accelerate, CLO ETFs attracting new pools of capital, and the structural resilience of CLOs intact, McEnteggart sees the asset class as one of the most compelling opportunities in private capital markets.

“Attractive spreads, low defaults and expanding investor interest make CLOs a standout proposition,” she concludes. “Compared with bonds or high-yield markets, CLOs are performing more strongly, and as more investors – institutional and retail alike – seek exposure, I believe CLOs will remain at the centre of private credit growth in the years ahead.”

Ramla Soni

Structured Finance

Job swaps weekly: Crescent lures two SRT veterans

People moves and key promotions in securitisation

This week’s roundup of securitisation job swaps sees Crescent Capital hiring two industry veterans and credit risk-sharing specialists as md in its London office. Elsewhere, AmTrust Financial Services and Blackstone Credit & Insurance have struck a deal surrounding the spin-off of some AmTrust Managing General Agencies and fee businesses, while Orrick has snapped up an eight-person CLO team from Cadwalader Wickersham & Taft. 

Crescent Capital Group has recruited Juan Grana as md to head the firm’s bank capital solutions team focusing on credit risk-sharing transactions. In addition, Doran Chernichen will be joining the bank capital solutions team as md. Both will be based in the firm’s London office. Crescent’s bank capital solutions strategy will seek to capitalise on the growth of the SRT market.

Grana brings more than 20 years of deal-making experience in the credit markets. Before joining Crescent, he was md, senior portfolio manager and head of origination at Chorus Capital. Prior to that, he played a key role at ArrowMark Partners, where he established the firm’s European offices and led investments in risk-sharing transactions.

Grana spent more than a decade at Credit Suisse, where he co-led capital and credit risk modelling before being appointed as md in credit structuring. In that role, he was instrumental in developing the firm’s risk-sharing capabilities. He also served as an md in the structured solutions group at Nomura.

Chernichen has more than 20 years of sell-side investment banking experience. He most recently held senior roles at Standard Chartered and Credit Suisse, where he covered credit managers and sponsors, and specialised in the credit risk-sharing space. Chernichen offers deep experience in credit risk-sharing issuance, financing and secondary trading.

Meanwhile, AmTrust Financial Services and Blackstone Credit & Insurance (BXCI) have signed a definitive agreement under which AmTrust and funds managed by BXCI will partner in the spin-off of certain of AmTrust’s Managing General Agencies (MGAs) and fee businesses in the US, the UK and Continental Europe into a new, independent company. Adam Karkowsky, who is currently president of AmTrust, will leave to become chairman and ceo of the new company.

AmTrust and the newly formed company will enter into a 10-year capacity agreement through which AmTrust will remain underwriter of the existing books of business offered through the MGAs. The agreement includes seven AmTrust subsidiaries: ANV, Risico, Collegiate, AmTrust Nordic, Arc Legal, Qualis and Abacus. These businesses provide diverse risk and insurance coverages, including cyber excess and surplus (E&S), directors and officers (D&O), transaction risk insurance, professional indemnity, legal expense, mortgage and structured credit, warranty, agricultural workers’ compensation, income protection, accident and health (A&H) and residential and commercial niche property.

Karkowsky brings deep insurance leadership experience, having first joined AmTrust in March 2011 and becoming president in December 2018. His leadership team at the new company will include AmTrust’s Joseph Brecher (currently svp, head of alternative investments) in the role of cfo and Jacob Decter (currently chief strategy officer, global fee businesses) in the role of coo.

Overall, the new company is expected to have over 700 employees and will operate under a new brand name, which will be announced at a later date. The transaction has been approved by AmTrust’s board and is expected to close by year-end 2025.

Following the close of the transaction, AmTrust will remain a leading multinational insurance company with approximately 6,000 employees, providing risk and insurance solutions with a broad offering across industries and classes globally.

Elsewhere, as SCI reported earlier this week, Orrick is hiring an eight-person CLO team from Cadwalader Wickersham & Taft. The hires in London include partners David Quirolo, Claire Puddicombe, Alex Collins and Daniel Tobias, whilst in the US the spree includes Gregg Jubin, Joe Beach, Nate Spanheimer and Skyler Walker. 

Peer-to-peer business lending platform FOLK2FOLK has announced a planned leadership transition to build on six years of profitability and position the company for its next phase of growth. Roy Warren, md of FOLK2FOLK since 2019, is retiring from the business and will join the board as an independent non-executive director in January 2026. He is succeeded by Kawai Chung as ceo, with Warren supporting a smooth transition.

Chung joins FOLK2FOLK with over 20 years’ experience in financial services and asset-backed investing. He has held senior leadership roles at challenger banks, private equity firms and investment managers, including SilverRock Financial Services, Intriva Capital, ARA Venn and RBS. His expertise spans capital markets, SME lending and structured finance, with a strong track record in scaling lending businesses and building investor confidence.

Additionally, the firm has appointed Claire Richards as executive director designate, subject to FCA approval. She is head of operations at FOLK2FOLK and has been with the company since 2018.

Winston & Strawn has appointed real estate finance specialist Richard Semple as a partner in the transactions department in its London office. Semple brings extensive experience advising sponsor, borrower and lender clients on real estate finance transactions across the UK and European markets. His practice covers all aspects of domestic and cross-border real estate finance matters, including origination, acquisition, lending, syndication, securitisation, asset management, refinancing, disposal, restructuring and distressed debt investing.

Semple was previously a partner at Goodwin, which he joined in October 2020. Before that, he worked at Kirkland & Ellis, Vinson & Elkins, Allen & Overy and Olswang (now CMS).

Priya Sharma has joined PIMCO’s alternative credit strategy team, based in London. She previously worked in ILS at Aon, which she joined in September 2023. Before that, Sharma was vp - private credit and risk transfer at Citi and also had a stint in ABF at PNC Capital Markets.

Dentons’ debt capital markets-focused partner Victoria Wyer has relocated to the firm's Dubai office. She will work alongside existing clients in the region, as the debt capital market in the Middle East continues to evolve. Wyer joined Denton in 2019 and was promoted to partner in 2023. She previously spent nine years at Linklaters.

Citi Australia and New Zealand has hired Chris Alder as vp focusing on. commercial real estate finance underwriting and based in Sydney. Alder leaves his role as associate director at Wingate after three years with the business and previously worked at Commonwealth Bank and National Australia Bank.

And finally, Indiana-headquartered life and health insurance business CNO Financial Group is to acquire a minority stake in Janus Henderson-owned private asset-backed credit business Victory Park Capital Advisors (VPC). The transaction sees the new investors inject US$600m into new and existing VPC investment strategies. 

The deal is intended to expand both Janus Henderson and VPC's insurance presence. It comes a year after Janus Henderson acquired a majority stake in the private credit manager.

Corinne Smith, Ramla Soni, Kenny Wastell