Amid a backdrop of elevated interest rates and macroeconomic uncertainty, fixed-income structured products have emerged as a cornerstone of institutional and retail portfolios. CLOs, ABS, CMBS, and RMBS are delivering robust issuance volumes, attractive yields, and defensive characteristics in 2025. Below, we analyze key trends across these sectors.

Why Structured Products Still Matter in 2025

Structured products are designed to meet a range of investor goals, from principal protection to enhanced yield and conditional market exposure. In today’s environment of lingering inflation and cautious optimism around global growth, these instruments offer flexibility and customization that traditional assets often lack.

Regulatory oversight continues to ensure transparency and investor protection, particularly in developed markets like the U.S. and the U.K. The Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) in the U.S., along with the Financial Conduct Authority (FCA) in the U.K., remain active in monitoring disclosures and suitability standards for retail structured products.^12,13

Continued Growth in U.S. Structured Product Issuance

Structured product issuance in the United States has maintained strong momentum in the first half of 2025. This trend reflects investor appetite for capital-protected or yield-enhanced strategies in an uncertain macro environment.

Collateralized Loan Obligations (CLOs): Record Issuance Continues

CLO issuance is on pace for a third consecutive record year, with $215 billion projected for 2025 under baseline economic conditions, up from $190 billion in 2024.⁵ Driving this growth:

• Floating-rate appeal: Persistent rate volatility has kept demand strong for CLO tranches, which offer LIBOR/SOFR-linked coupons.

• Regulatory tailwinds: Improved bank capital rules have increased institutional participation, particularly in AAA and BB tranches.²

• Private credit expansion: Private credit-backed CLOs are projected to reach $50 billion in 2025, doubling 2021 levels, as direct lending displaces traditional syndicated loans.⁵

Asset-Backed Securities (ABS): Diverging Sector Trends

ABS markets show mixed performance in 2025:

Sector	2025 Issuance Trend	Key Driver
Equipment ABS	+11% YoY	Strong capex in manufacturing 3
Subprime Auto ABS	-4% YoY	Stabilizing delinquency rates 3
Timeshare ABS	+18% YoY	Vacation property demand rebound 3

Despite a 19% year-to-date decline in overall ABS issuance, structural innovations like granular pool diversification and dynamic credit enhancement are attracting yield-focused buyers.⁸

Commercial Mortgage-Backed Securities (CMBS): SASB Dominance

Private-label CMBS issuance hit $37.55 billion in Q1 2025, a 21.7% quarterly increase, with single-asset single-borrower (SASB) deals comprising 72% of volume.⁴

Notable developments:

• CRE CLO growth: Issuance reached $6.2 billion in April 2025, exceeding full-year 2023 totals, driven by transitional office property refinancing.³

• Delinquency pressures: Overall CMBS delinquencies rose to 7.03%, though industrial (-0.10%) and retail (-0.70%) properties showed improvement.³

Residential Mortgage-Backed Securities (RMBS): Private Label Revival

Private-label RMBS issuance is up 13% YoY through April 2025, fueled by:

• Non-QM loan securitizations addressing housing affordability constraints.³

• Seasoned loan pools: 45% of 2025 issuance involves loans originated pre-2023, benefiting from home price appreciation.¹⁰

The BBH Structured Fixed Income Composite returned 1.86% in Q1 2025, outperforming benchmarks by 35 bps, with RMBS contributing significantly to excess returns.¹⁰

Regulatory and Market Infrastructure Shifts

Two structural changes are reshaping markets for structured products:

1. Mandatory Treasury clearing: Effective December 2025, this SEC rule is expected to improve liquidity spillover into structured credit markets.⁹ The upcoming implementation of mandatory Treasury clearing, set to take effect in December 2025, is anticipated to significantly enhance liquidity spillover into structured credit markets. This new rule aims to create a more efficient clearing process for Treasury securities, which could lead to heightened market stability and improved access to capital for participants in structured credit markets. By streamlining the clearing process, the SEC seeks to mitigate counterparty risks and promote greater transparency, ultimately fostering a more robust trading environment. The expected benefits of these changes include increased investor confidence, a more vibrant marketplace for structured credit products, and a reduction in overall transaction costs, which could catalyze greater investment activity in the sector.

2. FINRA Rule 2165 enhancements: Updated suitability requirements for retail structured product sales took effect in March 2025, emphasizing cash flow transparency.⁷ The enhancements updated suitability requirements specifically aimed at retail structured product sales. These changes are designed to improve cash flow transparency for investors, ensuring that they have a clearer understanding of the potential risks and benefits associated with these financial instruments. The updated rules require firms to provide detailed information regarding the cash flow characteristics of structured products, enabling retail investors to make more informed decisions that align with their financial goals and risk tolerance. This initiative underscores the importance of transparency in the sales process and aims to protect investors from unsuitable investment recommendations.

Outlook: Strategic Positioning for H2 2025

As we move into the second half of 2025, structured products remain a relevant and strategic tool for portfolio construction. For investors seeking defined outcomes or tailored risk exposure, the structured product market is positioned to offer continued value in an evolving financial landscape.

With spreads on AAA CLOs at 148 bps and CMBS conduits pricing at +225 bps, structured products continue offering value relative to corporate bonds.^6,8

Portfolio managers cite three priorities:

1. Barbell strategies: Pairing short-duration CLO equity with long-duration SASB CMBS.

2. Sector rotation: Reducing exposure to office-backed CMBS (-1.13% MTD returns) while adding equipment ABS.^3,10

3. Liquidity management: Preparing for potential Fed rate cuts in Q4 2025 that could compress spreads.¹¹

Sources:

1 Morgan Stanley Fixed Income Outlook

2 Penn Mutual AM: CLO Demand

3 Diamond Hill: Securitization Trends

4 CRE Daily: CMBS Resurgence

5 LSEG: 2025 CLO Forecast

6 Janus Henderson: Securitized Opportunities

7 FINRA Regulatory Updates

8 AAM: Structured Products Outlook

9 ICE: Treasury Clearing Impact

10 BBH Structured Returns

11 Guggenheim Sector Views

12 TR15/2: Structured Products: Thematic Review of Product Development and Governance | FCA

13 2025 FINRA Annual Regulatory Oversight Report | FINRA.org

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