Goldman Sachs Leads Bidding for $37 Billion CLO Manager Palmer Square

Goldman Sachs is the lead bidder to acquire Palmer Square Capital Management, the Kansas-based collateralized loan obligation manager overseeing $37 billion in assets, Bloomberg reported Tuesday.

The talks may not result in a deal. But they signal Goldman's continued push to expand its footprint in alternative credit markets — and a chance to beat alt heavyweights like Apollo at their own game.

What are CLOs, and why is Goldman buying them now?

CLOs are pools of floating-rate loans, often rated below investment grade, that let investors chase higher-than-average returns in exchange for taking on greater default risk. They can deliver double-digit returns in today's 5% rate environment, and their structures are designed to limit risk, in part through diversification.

"In a market environment shaped by inflation uncertainty and evolving monetary policy, CLOs represent a distinct segment of the fixed income landscape," Fidelity portfolio managers wrote in a white paper earlier this year. "Their floating-rate nature, diversified underlying collateral, and layered structural protections have historically supported income generation with limited interest rate sensitivity."

VanEck's analysis found CLOs have typically weathered market downturns better than high-yield and corporate bonds.

Why does the timing matter?

Goldman would be buying Palmer Square at a moment when the firm's core product is in high demand — and amid a private credit liquidity squeeze. An acquisition would let Goldman expand its credit and alternatives offering outside traditional banking and ramp up competition with established alternative asset managers.

How are rivals moving in CLOs?

The competitive front is already crowded:

• In March, Blackstone's flagship private credit fund BCRED sold a roughly $450 million CLO deal. The firm had appointed a new head of CLOs at the end of last year.
• In February, Ares Management reportedly priced a second European CLO.
• Also in March, Apollo secured a new credit line that, per Bloomberg, could bring funding to Apollo's debt arm to originate or buy new loans. Such financing often comes just ahead of issuing a CLO. Apollo's previous deal was a roughly $700 million CLO issued around the same time last year, the outlet reported.

What would a deal mean?

For Goldman, Palmer Square offers immediate scale in a product class that benefits directly from the current rate environment — floating-rate structures with built-in protections that Fidelity's managers argue limit interest rate sensitivity. The bank would gain a $37 billion platform without building one from scratch.

The deal is not done. Bloomberg's report makes clear an agreement may not be reached. Still, the bidding itself shows where Goldman sees the next leg of growth: alternative credit, where Apollo, Blackstone and Ares have already staked claims with new CLO issuance and warehouse financing over the past year.