Now that the liquid loan market is opening, albeit with mostly refinancings, larger issuers have more choices. This is actually a good and natural thing. For those companies willing to go through the ratings and syndication processes in the bank market, terms can be competitive.

Because CLO equity investors benefit from much higher structural leverage, BSL pricing can be cheaper than private debt. This illiquidity premium (or liquidity discount) is historically 100-300 bps, depending on ratings. For quality borrowers, particularly in the tech space, leverage can also be higher. And of course, covenant-lite is the standard for syndicated loans.

The paths borrowers can take depend on a number of factors. Because market and economic conditions have moved to risk-on, liquid loan buyers are positioned to hold single-B, even weak single-B, assets. Retail funds are now seeing cash inflows, with $1.2 billion garnered over the past five weeks, according to Morningstar Direct.