Barings to launch European private credit CLO

Barings is set to launch one of the first private credit collateralised loan obligations (CLOs) in Europe.

Bloomberg has reported that Barings registered the new vehicle at the Irish companies’ registration office earlier this month, under the name ‘Barings Euro Middle Market CLO 2024-1 DAC’.

Read more: Comvest issues debut mid-market CLO

The CLO is believed to be targeting the middle market, and will bundle together private credit loans into one single investment vehicle.

It would be one of the first European CLOs to hit the market, despite an abundance of speculation around the potential of the product offering.

A private credit CLO pools private loans, offering investors structured returns with varying risk levels.

While private credit CLOs are popular in the US, the European private credit CLO market has struggled to take off due to regulatory challenges, a lack of investor familiarity, limited loan supply, and competition from established debt markets.

Read more: Barings’ European private credit unit has deployed €1.5bn this year

Barings has launched three CLOs in the US market in the year to date. Most recently, the firm closed on a $511.4m (£393.31m) broadly syndicated CLO managed in July 2024.

However, the Barings Euro Middle Market CLO represents the firm’s first foray into the European private credit CLO market.

European private credit CLOs have been touted as a solution to slower fundraising in the European private credit market.

Read more: Barings confirms private credit focus following staff exodus