Pricing eyed for OZLM XII CLO; new issuance, BWIC volumes slower on the week

By Rebecca Melvin

New York, April 30 – Pricing was obtained for the Och-Ziff Loan Management LP $565.65 million collateralized loan obligation offering of notes due April 2027, according to a market source.

At the top of the deal structure, OZLM XII, Ltd./OZLM XII, LLC sold $349.25 million of class A-1 floating-rate notes at Libor plus 145 basis points and $70,625,000 of class A-2 floating-rate notes at Libor plus 200 bps.

New issuance has been quiet this week and so has the secondary market, a New York-based CLO strategist told Prospect News.

Lists of bids wanted in competition, which forms the secondary market, has been slower for the last three weeks, he said.

Given the lighter volume of new loan issuance, CLO new issuance is also expected to decline. “That’s a big trend and really meaningful, and it will create excess demand for the product,” he said.

The strategist was not concerned that the smaller pool of loans from which CLOs are derived would lead to a deterioration of credit quality in CLOs.

There is still plenty of loan issuance outstanding, he said. “There is still enough.”

There are $900 billion in loans outstanding, which is up from only about $600 billion in 2013, he said.

So far spreads have come in marginally. But that trend is likely to continue. “They will come in very slowly,” the strategist said.

Och-Ziff CLO pricing eyed

The $565.65 million Och-Ziff CLO has seven tranches, including an equity tranche. The CLO, backed primarily by first-lien senior secured loans, has a three-year non-call period and a five-year reinvestment period.

In addition to the class A-1 and class A-2 tranches there is a $25,525,000 tranche of class B floating-rate notes that priced at a spread of Libor plus 290 bps; a $35,525,000 tranche of class C floaters that priced at Libor plus 370 bps; a $25,075,000 tranche of class D floating-rate notes priced at Libor plus 540 bps; a $11 million tranche of class E floating-rate notes priced at Libor plus 665 bps; and a $48.65 million tranche of subordinated notes.

J.P. Morgan Securities LLC was the placement agent.

Manager Och-Ziff Loan Management is an affiliate of New York City-based alternative asset manager Och-Ziff Capital Management Group LLC. The manager has brought two deals so far this year, and it brought four CLO transactions in 2014.

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