Private Credit: Structured Credit Trend Watch—AI and Conflict Shape Market Outlook

Structured credit and collateralized loan obligation (CLO) market activity was relatively stable in early 2026. Issuance volume remained on pace with 2025, average broadly syndicated loan (BSL) AAA CLO spreads were largely range-bound between 115 basis points (bps) and 131 bps, and middle market (MM) CLO AAA spread premiums tightened. However, these trends largely preceded the recent increase in market uncertainty.

KBRA believes that the conflict in the Middle East could reignite inflationary pressures, while continued strength in the labor market is clouding the direction of base rates and limiting the magnitude of additional monetary easing in 2026 (see KBRA’s 12 Things in Credit). At the same time, continued headline concerns around artificial intelligence (AI)-driven disruption and capital formation across credit markets are expected to remain key areas of…