Evaluating Tail Risk Across BSL and Private Credit CLOs

Shiloh Bates provides his perspective on assessing tail risk, explaining that secondary CLO buyers primarily rely on loan market pricing to adjust for risk in distressed positions. He contrasts broadly syndicated and private credit CLOs, highlighting that private credit avoids lender-on-lender violence and liability management exercises, offering cleaner restructuring dynamics. While it may be too early to draw firm conclusions, he notes that over the past five years private credit has outperformed BSL on a credit loss basis.