Anchorage Capital prices; Garrison in CLO pipeline; annual supply to surpass $100 billion

By Cristal Cody

Tupelo, Miss., May 8 – In new primary action, Anchorage Capital Group, LLC brought a $540 million cash flow CDO transaction, according to a market source.

The offering is collateralized primarily by corporate bonds and loans.

According to Moody’s Investors Service, the deal’s structure is generally consistent with CLOs. Some differences include that up to 65% of the portfolio may consist of second-lien loans, unsecured loans, bonds, subordinated bonds and unsecured bonds and up to 100% of the portfolio may consist of fixed-rate notes, Moody’s said.

Impending risk retention regulations prohibit banks from owning CLOs that hold bonds and broadly syndicated CLOs issued in 2015 have complied with the Volcker legislation and are secured primarily by senior secured corporate loans.

Anchorage Capital Group previously sold the $569.93 million broadly syndicated Anchorage Capital CLO 6, Ltd./Anchorage Capital CLO 6, LLC deal on March 11.

Coming up in the pipeline, Garrison Investment Group, LP plans to price a $413.7 million CLO offering.

More than $41 billion of U.S. CLOs have priced year to date, according to data compiled by Prospect News.

CLO issuance is on pace to exceed $100 billion in 2015, Barclays analysts said in a note on Friday.

Loan issuance has picked up and non-retail demand from business development companies has improved in recent weeks, according to the note.

“Although not an overwhelmingly large portion of the buyer base, the demand from BDCs provides support on the margins for both second-lien loans and CLO equity,” the analysts said. “We estimate that 10-15% of BDC debt holdings are allocated to large corporate issuers, with an outsized portion of that total in second-lien debt.”

Anchorage Capital prices

Anchorage Capital Group sold $540 million of notes due July 28, 2030 in a cash flow CDO transaction, according to a market source.

Anchorage Credit Funding 1, Ltd./Anchorage Credit Funding 1, LLC priced $254.2 million of 4.3% class A senior secured fixed-rate notes; $63.5 million of 5.3% class B senior secured fixed-rate notes; $30.8 million of 6.3% class C mezzanine secured deferrable fixed-rate notes and $191.5 million of subordinated notes.

GreensLedge Capital Markets LLC arranged the offering.

Anchorage Capital Group will manage the deal.

The notes are non-callable until July 28, 2017. The reinvestment period ends July 28, 2020.

The transaction is collateralized primarily by corporate bonds and loans.

The New York City-based global asset manager brought three CLO transactions in 2014.

Garrison preps new CLO

Garrison Investment Group plans to price $413.7 million of notes due May 25, 2027 in the Garrison Funding 2015-1 Ltd./Garrison Funding 2015-1 LLC offering, according to a market source.

The deal includes $248 million of class A-1 floating-rate notes (//AAA); $47.9 million of class A-2 floating-rate notes; $20.7 million of class B floating-rate notes; $26.7 million of class C floating-rate notes; $21.4 million of class D floating-rate notes; $7 million of class E floating-rate notes and $42 million of subordinated notes.

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

Garrison Funding 2015-1 Manager LLC will manage the CLO.

The CLO will have a two-year non-call period and a four-year reinvestment period.

The deal is backed primarily by first-lien senior secured corporate loans.

Proceeds from the offering will be used to purchase a portfolio of about $400 million of mainly senior secured leveraged loans.

Garrison Investment is a New York City-based middle market credit and asset investment firm.

© 2015 Prospect News.
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