Allstate Issues $500 Million CLO With AI Debt Cap

Allstate Corp issued a $500 million collateralized loan obligation (CLO) last week, introducing a novel restriction on the types of debt used as collateral. The transaction includes an explicit cap that limits AI-related debt to 15% of the total collateral, marking the first time such a restriction has been applied to a CLO.

PGIM, the asset management arm of Prudential Financial Inc., served as the anchor investor for the deal and pushed for the AI debt limit to prevent excessive exposure to the sector. BNP Paribas SA arranged the transaction. The move signals a cautious approach toward the concentration of artificial intelligence assets within structured credit products.