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BSL Returns Higher in February: Strong Demand from CLOS

Broadly syndicated loans (BSLs) delivered strong returns in February, shrugging off inflation concerns. A robust economy and easing market stress indicators boosted investor appetite and loan prices. Higher base rates drove the majority of the returns, further enhancing the appeal of floating-rate BSLs in a higher-for-longer rate environment.

The surge in CLO issuance during February highlights the intense demand for BSLs. This demand drove down CLO bond spreads, leading to a resurgence in CLO resets and refinancings. While certain credit indicators warrant monitoring, the overall picture in the BSL market remains positive, suggesting continued investment potential.