CLO volume slips; issuance shows ‘signs of life’; Columbia Management Investment on tap

By Cristal Cody

Tupelo, Miss., July 31 – CLO volume remains down in July compared to a year ago, but the primary markets have stayed active late in the month with new deals expected on the horizon.

“With another below average issuance month, the U.S. CLO market appears to be continuing the four-month trend of ‘month-on, month-off issuance,’” according to a Wells Fargo Securities, LLC note on Friday from Dave Preston, senior analyst, and Mackenzie Miller, associate analyst. “CLO issuance is showing signs of life, but the loan market is still providing resistance.”

In July, total global CLO issuance was $8.1 billion priced in 16 deals, down from the $16.35 billion brought in 31 deals in the same period a year ago, according to Prospect News data.

“Sourcing collateral continues to seem to be a challenge for managers, while CLO liability spreads were flat to slightly wider (namely in the AA and single-A tranches) on the month,” the Wells Fargo analysts said. “CLO spreads were largely unchanged this week, but with a more optimistic tone, as spreads proved resilient despite increased secondary trading and primary volume.”

Europe primary action picked up with five new deals priced over the month, including AXA Investment Managers, Inc.’s €362.3 million Adagio IV CLO Ltd. private placement deal, according to a market source. Final pricing details were not available by press time.

Looking ahead to the deal calendar, Columbia Management Investment Advisors, LLC plans to bring its second CLO offering of the year.

Columbia Management on tap

Columbia Management Investment Advisors is in the deal pipeline with a $509 million offering of notes due Oct. 15, 2026 in the Cent CLO 24 Ltd./Cent CLO 24 Corp. deal, according to a market source.

The transaction includes $308.5 million of class A-1 floating-rate notes (//AAA); $73.5 million of class A-2 floating-rate notes (//AA); $30 million of class B floating-rate notes (//A); $25.5 million of class C floating-rate notes (//BBB); $22.5 million of class D floating-rate notes (//BB); $10 million of class E floating-rate notes (//B) and $39 million of subordinated notes.

Goldman Sachs & Co. is the placement agent.

The transaction is backed primarily by a revolving pool of broadly syndicated senior secured corporate loans.

Columbia Management Investment previously was in the primary market on March 19 with the $578 million Cent CLO 23 Ltd./Cent CLO 23 Corp. deal.

The Boston-based investment management firm priced two CLOs in 2014.

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