**Golub Capital Capitalizes on Falling Loan Prices Amid Market Shifts**
In a strategic move this week, Golub Capital swiftly acquired a substantial volume of leveraged loans, seizing the opportunity presented by a significant drop in prices. Sources familiar with the situation revealed that French bank Societe Generale was collaborating with Golub to assemble a new collateralized loan obligation (CLO) and had already attracted investors for AAA-rated bonds at a spread of 1.04 percentage points over a benchmark.
The backdrop for this activity was President Donald Trump’s recent tariff announcement, which caused secondary loan prices to plummet to their lowest levels since July 2023. In response, Golub expanded its loan portfolio for the CLO deal, reportedly adding approximately one-third of the total loans required. This CLO transaction is classified as a “static” deal, indicating that the loan portfolio will remain unchanged once finalized.
Societe Generale opted not to comment on the developments, and Golub Capital did not respond to inquiries. This incident marks at least the second time during the recent tariff-induced market volatility that a CLO manager has acted quickly to acquire loans for a new offering. Earlier this week, Bloomberg reported that Elmwood Asset Management is also pursuing a similar transaction in partnership with Sumitomo Mitsui Financial Group Inc.
These rapid acquisitions resemble the “print and sprint” strategy, where managers quickly purchase loans in the secondary market rather than spreading out their acquisitions over an extended period. Although loan prices have experienced fluctuations following Trump’s announcement of a 90-day pause on certain tariffs, they remain at levels last observed in late 2023.
As the market continues to react to these developments, the implications for CLO transactions and leveraged loans will be closely monitored by industry experts.
**FAQ**
*What is a collateralized loan obligation (CLO)?*
A collateralized loan obligation (CLO) is a type of structured credit product that pools together various loans, typically leveraged loans, and issues different tranches of securities backed by these loans to investors.
