CIFC refinances; volume improves from May; limited loan supply, refinancings slow issuance

By Cristal Cody

Tupelo, Miss., June 5 – Limited loan supply and strong refinancing activity continue to hamper CLO primary action, but June is off to a good start, market sources said.

CIFC Asset Management LLC announced on Friday it closed on the refinancing of $662 million of notes in the vintage CIFC Funding 2012-II, Ltd. deal.

The original notes were redeemed on Friday. Final refinancing details were not available by press time.

Morgan Stanley & Co. LLC was the refinancing agent.

“We are pleased that the refinancing allowed CIFC 2012-II to benefit from the overall tightening in the CLO liability market and bring the transaction into compliance with the Volcker rule,” Oliver Wriedt, CIFC’s co-president, said in a news release.

CIFC previously refinanced the CIFC Funding 2011-I, Ltd. deal in January.

The credit manager is based in New York City.

More than $5 billion of CLOs have been refinanced year to date, according to market sources and data compiled by Prospect News.

“The [loan] supply slowdown and restart of refinancings has affected CLO creation, which slowed last month after a strong March and April,” Barclays Bank plc analysts said in a note on Friday. “Without a significant widening of collateral spreads, which we do not foresee, it is difficult to envision an onslaught of CLO creation. Our forecast for the year remains $90-110 [billion], and the total is likely to be toward the lower end of that range.”

June primary active

The first week of June saw several new deals and refinancings from managers including Onex Credit Partners, LLC, GoldenTree Asset Management LP and Apollo Credit Management (CLO) LLC.

“The CLO primary market got off to an audacious start in June, with $3.1 billion in volume in a three-day period this week,” Wells Fargo Securities, LLC senior analyst Dave Preston said in a note on Friday.

Issuance is “already 55% of May’s entire monthly total of $5.7 billion,” Preston said. “May 2015 posted the lowest monthly U.S. CLO issuance total (excluding January) since September 2013. Despite May’s low volume, issuance through the first five months was actually slightly ahead of 2014’s pace.”

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