Barings Registers Second European Middle-Market CLO, Boosting Private Credit Push

Barings has registered its second European middle-market CLO, following its first deal in April. The new warehouse is expected to price quickly, as the original deal took just 50 days. The development highlights growing interest in securitizing private credit for European investors, with the US seeing 39 new issue middle-market or private credit CLOs in 2025, totaling $20.5 billion in sales.

Barings has registered its second European middle-market CLO, following its first deal in April. The new warehouse is expected to price quickly, as the original deal took just 50 days. This development underscores the growing interest in securitizing private credit for European investors, with the US seeing 39 new issue middle-market or private credit CLOs in 2025, totaling $20.5 billion in sales [1].

The asset manager filed the new warehouse with the Irish authorities on July 28. Barings' first deal was a static vehicle, which means the loan portfolio was fixed at issuance and repayments are used solely to pay down the CLO’s liabilities. This reduced complexity lowers risk for investors and typically reflects tighter pricing of the notes. The original CLO took just 50 days from its initial filing to pricing, helped by the fact that the bulk of its portfolio consisted of private credit loans originated by Barings itself [1].

The new CLO follows a similar static approach, indicating that Barings is sticking to a strategy that has worked well in the past. The reduced complexity of static vehicles makes them attractive to investors seeking lower-risk investments. In 2025, four other static CLOs have priced in Europe, including Palmer Square’s second deal of the year, which priced with the most senior, triple-A rated class of notes at a 115 basis point spread over Euribor [1].

Barings’ second deal is not the only recent development in the European CLO market. Ares has also priced its own maiden European direct lending CLO and registered the warehouse for a second. Ares’ deal, however, is dynamic, meaning the manager has the ability to trade in and out of the underlying loans. This dynamic structure is more common in CLOs invested in broadly syndicated loans [1].

The growing interest in European CLOs is also reflected in the launch of new CLO ETFs. BlackRock Investment Management has launched two new CLO ETFs in Europe, iShares $ AAA CLO Active UCITS ETF and iShares € AAA CLO Active UCITS ETF. These ETFs provide exposure to dollar-denominated and euro-denominated CLOs, respectively, and are managed by experienced professionals [2].

The European CLO market is still in its infancy, and each deal priced so far has followed a different approach. This diversity highlights the market’s potential for innovation and growth. As more deals are priced and the market matures, it is likely that we will see a clearer template emerge for European direct lending CLOs.

References:

[1] https://www.bloomberg.com/news/articles/2025-08-01/barings-fuels-europe-s-private-credit-clo-push-with-second-deal
[2] https://pitchbook.com/news/articles/blackrock-launches-two-new-clo-etfs-in-europe