Owl Rock Capital Advisors prices $333.5 million CLO; stronger middle-market supply eyed

By Cristal Cody

Tupelo, Miss., Nov. 16 – Owl Rock Capital Advisors LLC priced $333.5 million in the company’s fourth middle-market CLO deal of the year.

Owl Rock Capital Advisors subsidiary Owl Rock Technology Advisors LLC will manage the new CLO.

Middle-market volume year to date totals about $8 billion, compared to $14 billion of average issuance in the previous few years.

“Middle-market issuance has picked up in the past few months and we project a return to normalcy in 2021,” BofA Securities, Inc. analysts said in a research note released on Monday.

BofA Securities forecasts gross middle-market CLO issuance of $15 billion in 2021.

Middle-market new issue CLO AAA spreads are at Libor plus 190 basis points, 77 bps tighter since May. BB spreads have not recovered from pre-Covid-19 levels and are printing at an average Libor plus 1,000 bps.

In the broadly syndicated CLO space, primary action was quiet over the past week.

About $70 billion of broadly syndicated CLOs have priced year to date, according to market sources.

In the secondary market, broadly syndicated CLO spreads rallied on clarity in the U.S. election results and Pfizer Inc.’s announcement of a more than 90% effective rate for a Covid-19 vaccine with CLO AAA-A tranches 10 bps tighter, BBB-BB spreads 25 bps better and B-rated tranches 50 bps firmer on the week, the BofA analysts said.

AAA tranches ended Friday at a Libor plus 130 bps average, while BBB tranches were 25 bps better at Libor plus 450 bps.

BWIC volume totaled $673 million, up from $541 million in the prior week.

Owl Rock Technology prints

Owl Rock Technology Advisors priced $333.5 million of notes due Jan. 15, 2031 in a new middle-market CLO transaction, according to a market source.

Owl Rock Technology Financing 2020-1/Owl Rock Technology Financing 2020-1 LLC sold $200 million of the class A floating-rate notes at Libor plus 285 bps.

MUFG was the placement agent.

Owl Rock Technology Advisors will manage the CLO, which has a one-year non-call period and a two-year reinvestment period.

The CLO is backed primarily by middle-market senior secured term loans.

Owl Rock Capital has priced four new middle-market CLOs in 2020.

The alternative asset manager is based in New York.

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