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Tom Flannery is the group head and chief investment officer at CTM Asset Management, a US BSL CLO manager that debuted last summer. CTM has priced three new issues, most recently CTM CLO 2026-3 on 11 February.
Despite the recent AI-induced selloff in loans, Flannery believes that opportunities to build par remain in short supply. We spoke with him on his experience at debuting a CLO management shop, why CTM was underweight in software well ahead of the selloffs this year, and where the loan market is headed.
1. Tell us about the founding of CTM. Given the senior leadership team's experience at established, large CLO platforms, what has it been like to set up a new CLO management shop?
The partners in CTM are Chatham Asset Management, myself, Matt Sosland and Andrew Chatham. Chatham Asset Management is a $6 billion investment firm with deep roots in the leveraged finance space. Chatham is the majority owner of CTM, with the employees being minority owners.
It's been super exciting to get the platform off the ground. Chatham has been a great partner and has done everything possible to set us up for success. We've already built a 14-person team dedicated to CTM, and Chatham has committed $300 million of equity to CTM CLOs.
As a new firm, you start fresh. We get to build all of our systems, research processes, and data feeds from scratch. My partner Matt Sosland has a lot of experience setting up investment platforms, whereas I previously worked in the same group for 25 years. It's been a real benefit for us to have complementary backgrounds and skill sets.
2. What have been the biggest surprises you’ve had launching a debut CLO business, and what has been the hardest part of the process?
While not entirely unexpected, the receptivity that we found amongst tranche investors and street counterparties has provided great validation of the team and our approach. There's clearly a place in the crowded CLO market for new platforms that, in our opinion, do things the right way and take a long-term view.
I think the hardest, and most important, part of launching a new platform is building the right team and culture. If I look back over the last 18 months, both from an investment standpoint, and also the day-to-day interactions with the team, I'm most proud of the talent we have attracted and the collaborative culture we have established.
All of our analysts and operations staff have deep roots in the loan and CLO markets. Our senior investment team alone has about 150 years of experience in the loan markets.
3. CTM has priced three new issues since debuting last year, but has had to contend with Liberation Day and now the sell-off driven by software. How do you manage your portfolio in these volatile and rapidly changing markets?
You are right in that we have ramped and managed our portfolios in evolving and volatile markets. Thus far, we've generated very strong relative performance across market conditions due to excellent credit selection, an underweight position in software, and overweight positions in gaming and leisure and power generation.
From early in 2025, when we first started investing, we've been consistently underweight software. We believe many of the software names are very highly levered, and have more business and technology risk than the markets are pricing in.
4. The software sell-off has hit CLO portfolios. But are there opportunities for CLO managers to build par and find good loans at better prices?
In my opinion, this is still not a great par builders' market. Even with the weakness in 2025 and the drop in the technology sector in January, we still have approximately 70% of the market trading at 98 and above. Overall, the demand for the asset class remains strong, and some managers are still stretching for yield. So this limits the number of attractive discount names.
There are a handful of discount names that we like, but it's a fairly short list. Being underweight in software gives us the opportunity to take advantage of the recent selloff, but we are being very deliberate and selective in our approach.
5. Prior to the recent volatility, US CLO liability spreads were headed back towards historical tights. Could the market experience a drop in overseas demand as yields from CLOs tighten?
Historically as the CLO market looks to test new tights, it's almost always naturally met with some level of resistance.
But with that said, despite the tightening that we've seen, we still believe CLOs continue to offer compelling value to a variety of investors across the capital stack compared to other asset classes.
What's been particularly helpful in recent years is that the investor base has expanded meaningfully, especially with respect to the overseas investors, and that's been healthy for the CLO market overall.
6. CTM launched its CLO business with capital committed from Chatham Asset Management. As you look forward to the future of the platform, do you have plans to fundraise for additional CLO capital?
Clearly the Chatham commitment provides us with great runway, but we're certainly focused on raising CLO equity from multiple avenues as we continue to grow. We recently hired Alex Grause as CTM's head of business development to spearhead those fundraising efforts.
7. With 2026 expected to be another huge year for CLO issuance, do you believe that the loan market will provide sufficient supply?
Generally speaking, there was a lot of optimism going into 2026 with respect to the new issue calendar and the prospects for the primary loan market. The recent weakness in the tech space has certainly tempered those expectations.
That being said, we expect supply from primary loan issuance, as well as called CLOs and CLO amortization, to be supportive of CLO ramps in 2026.
8. As the CLO investor base continues to broaden and mature this year, what players are you watching the most and what effects could their participation have on the market?
Certainly the large domestic banks and insurance companies are a very big part of the CLO market. We expect them to continue to participate meaningfully.
The ETF buyer base has also expanded in recent years up and down the capital stack, and not just in the US, but overseas as well. I think that's been a great channel for the CLO market.
Outside the US, there's been recent headlines on UK and EU insurance companies looking to get more involved in the CLO market. That would be very healthy and good to see.
9. What’s one new place in the world you’d like to visit, and why is it meaningful to you?
One place I’d like to see is the pyramids in Egypt. It's something the Flannery family would like to do together.
It's one of the most unique and amazing sights in the world, and something to which the pictures can't do justice.
