Sona plans more all-credit CLOs in Europe

Creditflux reported on Sept. 3 that Sona intends to issue more hybrid CLOs in Europe under what the firm calls an "all-credit CLO strategy," blending private credit and broadly syndicated loans in the same collateral pool. The exclusive report points to a repeat of a structure Sona first brought to market in August, and the framing suggests the firm views the hybrid as a model worth using again.

This desk covered the Aug. 24 debut, when Sona priced Europe's first hybrid BSL-private credit CLO, a EUR 403.9m vehicle arranged by Goldman Sachs. The deal fused syndicated loans, which bring scale and daily pricing, with direct loans, which bring the higher coupons and negotiated controls of private credit, into one rated liability stack. That made it the first European test of whether the two asset classes could be financed side by side in a single CLO, and now the manager is signaling an encore.

The encore matters because the first print proved only that the structure could clear; liability investors still have no template for pricing a second, third, or tenth hybrid, and no evidence of how much private credit a CLO can absorb against ratings-driven capital. Those questions get answered by repetition, and if Sona issues again, every deal adds a data point on the appropriate balance between the two collateral classes.

The move fits a broader shift in how direct lenders fund themselves: with direct lending volume under pressure, the CLO market has become the cheapest source of term leverage for managers, and a hybrid structure lets a private credit book tap that same pool of public debt buyers. The two halves of the collateral pool work together on the liability side, with broadly syndicated loans offering the spread, liquidity, and rating history CLO investors trust while private credit adds yield to the portfolio—and that pairing is what makes the "all-credit" label plausible beyond Sona's own pipeline.

CLO resets began as fixes and hardened into permanent architecture; the hybrid looks set to follow, and Europe is where the test matters most. The region's direct lenders have historically used CLO financing less than their U.S. counterparts, so each successful hybrid print is evidence that private credit can reach the public liability market there. The next Sona deal will be worth reading for the size of its private credit bucket: that allocation, more than the issue size, will tell allocators how deep the demand for this paper runs.