The loan market is changing fast. Economic uncertainties and rising interest rates are shaking up what borrowers need, what lenders prioritize, and how deals are structured. The entire market is pressured to adapt quickly, with continued innovation in private debt and hybrid deal structures.

The CLO market showed resilience and growth in 2023, with the U.S. market reaching record issuance levels in early 2024, indicating strong demand. We've seen CLO managers increasingly focus on refinancing and resets to extend deal life and adjust to lower costs. The availability of new loans and adaptability of service providers remain essential for starting new CLOs.

The possibility of rising distressed assets and default rates is a constant concern in the loan market. Many borrowers and lenders prefer to avoid traditional bankruptcy due to the costs involved. Stakeholders are increasingly open to alternative solutions. In these scenarios, Loan Agents, with their deep understanding of loan documents, can be crucial in guiding creditors and their counsel to the best possible outcomes.

Flexibility and innovation will drive the future of loan servicing. In our view, being agile adds more value than focusing on scale, leading to greater efficiency. As a result, service providers must aggressively embrace technology and data transformation, creating unexpected benefits for loan professionals, enhancing engagement and reinforcing essential skills.