Middle-market volume tops $4 billion; Eagle Point CLO portfolio faces pricing pressure

By Cristal Cody

Tupelo, Miss., Sept. 9 – More than $4 billion of middle-market CLOs have priced year to date following two new deals in September, according to market sources and Prospect News data on Wednesday.

NewStar Financial, Inc. priced $397.8 million of notes due 2027 in its second middle-market CLO deal this year.

The NewStar Commercial Loan Funding 2015-2 LLC offering priced via Wells Fargo Securities, LLC. Final pricing details were not available by press time.

NewStar Financial, a Boston-based middle-market commercial lender, priced three CLO transactions in 2014.

Fifth Street CLO Management LLC also was in the primary market this month with its previously reported $416.6 million middle-market CLO, Fifth Street SLF II Ltd./Fifth Street SLF II LLC.

CLO managers priced $7.2 billion of middle-market CLOs in 2014, according to market sources.

Pricing pressure eyed

In other activity on Wednesday, Eagle Point Credit Co. Inc. announced investments in its CLO portfolio “faced pricing pressure” in August, but the company does not anticipate a material change in the internal return estimates of its CLO equity positions.

“Over the last month, global markets faced significant price volatility,” Eagle Point Credit said in a news release to update its portfolio information for the month ended Aug. 31. “The company believes that the volatility was prompted by changes in oil and other commodity prices, among other macro factors.”

Eagle Point Credit estimates its portfolio has exposure to about 1,082 distinct underlying borrowers, with no borrower representing more than 0.93% of the company’s exposure to underlying loans.

As of August, the company’s portfolio of investments had an estimated exposure to the oil and gas industry of 4.4% and to the metals and mining industry of 1.5%.

Eagle Point Credit said it “estimates that over 97.3% of its exposure to corporate credit is in the form of senior secured loans.”

The company plans to release an extended August portfolio update later in September.

Eagle Point Credit is a Greenwich, Conn.-based closed-end management investment company that invests in equity and junior debt tranches of CLOs.

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