KBRA Releases Research – 2026 Structured Credit Sector Outlook: Record Issuance in a Maturing Credit Environment

NEW YORK--(BUSINESS WIRE)--KBRA releases its 2026 Structured Credit Sector Outlook, which provides market and performance themes as of year-to-date (YTD) 2025, as well as issuance volume and forecasts for 2026, collateral performance trends, and rating surveillance outcomes.

Some key takeaways from the report include:

• Themes to Watch: Assuming a more accommodative interest rate environment, we expect increased merger and acquisition (M&A) and leveraged buyout (LBO) activity, spurring primary loan issuance and CLO formation.
• Issuance Volumes: U.S. collateralized loan obligation (CLO) issuance—including broadly syndicated loans (BSL) and middle market (MM) CLOs—is projected to reach $220 billion in 2026, a 10% increase from KBRA's $198 billion estimate for 2025 and a new high-water mark for the market. European CLO issuance is expected to reach EUR60 billion in 2025, with similar issuance expected in 2026.
• Spreads: Tightening has continued across the structured credit landscape since the highs of late 2022 through 2023. KBRA expects spreads to remain range-bound in 2026.
• Credit Performance: Portfolio credit quality bears monitoring but has been manageable in 2025. Corporate borrowers will likely benefit from a more constructive financing environment as the calendar turns to 2026. However, pockets of stress are beginning to materialize, indicating that MM default rates will rise from recent lows.
• Surveillance Activity: Performance has remained strong, with no downgrades in 2025. Looking ahead, KBRA expects overall stability in 2026, with potential for modest positive rating migration driven by continued rate relief and loan amortization, while negative drift is likely to remain limited to seasoned, lower-rated tranches.

KBRA has streamlined the Outlook format this year to enhance the reader experience. We welcome any feedback or comments.

Click here to view the report.

About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

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