Blackstone and State Road Funding Administration are set to launch a European collateralised mortgage obligation (CLO) alternate traded fund (ETF), their first credit score partnership within the continent.

The 2 corporations have beforehand partnered on two US ETFs, sponsored by State Road IM and sub-advised by Blackstone that target the mortgage and excessive yield areas.

Learn extra: Palmer Sq. Capital Administration launches European CLO ETF

Blackstone mentioned that the brand new car will capitalise on the fast-growing European CLO market, which has grown at a median of eight per cent up to now 5 years and is at the moment valued at €250bn (£216.6bn). It’s forecast to end in €50bn of issuance by the top of 2025.

The brand new fund will put money into floating fee AAA rated tranches of Euro-denominated debt issued by CLOs, giving entry to European senior secured company loans and bonds.

As sub-investment supervisor of the ETF, Blackstone will actively handle the securities, whereas, because the ETF sponsor and funding supervisor, State Road IM is chargeable for the governance of the ETF and also will oversee distribution to institutional buyers, together with asset managers, asset homeowners, personal banks and wealth managers.

The 2 corporations are combining their expertise on the brand new providing. Blackstone is the biggest international supervisor of CLOs and set a file for international annual CLO issuance in 2024, whereas State Road IM has an in depth observe file within the ETF market.

Learn extra: Invesco launches two investment-grade personal credit score CLO ETFs

“Constructing on greater than a decade of partnership with Blackstone, we’re excited on the alternative to supply European buyers diversified publicity to the CLO market,” mentioned Ann Prendergast, head of EMEA at State Road IM.

“Each State Road IM and Blackstone have introduced our deep experience and international scale to bear within the improvement of this product. By means of an lively ETF construction, we are going to leverage this experience with a shared purpose of producing increased returns from liquid debt tranches, which have exhibited traditionally excessive yields and a low period threat profile.”

Dan Leiter, international head of liquid credit score methods and head of worldwide for Blackstone’s credit score and insurance coverage division, added: “We’re excited to associate with State Road to broaden entry to liquid credit score in Europe. As the biggest CLO supervisor globally, we see robust momentum in Europe, which is an space of conviction and progress for Blackstone and our credit score enterprise.”

Learn extra: First-time CLO managers getting ready to enter European market