Eaton Vance preps firm’s first CLO of year; BB, B tranches remain soft in secondary trading

By Cristal Cody

Tupelo, Miss., Oct. 1 – Market activity is picking up in the CLO market with a new deal priced and another in the pipeline, according to market sources on Thursday.

Ares Management LLC sold $707 million of notes in the Ares XXXVII CLO, Ltd./Ares XXXVII CLO, LLC deal via Goldman Sachs & Co. Final pricing details were not available by press time.

Looking to issuance coming up, Eaton Vance Management is marketing a $408.23 million CLO in its first transaction of the year.

CLO volume is expected to stay light over October following a quiet September that saw about $4.6 billion of volume from 10 deals, according to market sources and Prospect News data.

“September was the lowest issuance month since July 2013,” Wells Fargo Securities, LLC analysts said in a market note on Thursday. “CLO monthly issuance has declined each month since June, but we expect seasonal pressures will push issuers to attempt to price deals before year-end.”

In the secondary market, BB- and B-rated CLO notes continue to remain soft.

“The BB and B tranches are currently trading at their widest point in the past 52 weeks, and BBB spreads look tight when compared to BB levels,” the Wells Fargo analysts said.

BB and B notes were quoted 25 basis points to 50 bps wider earlier in the week.

Eaton Vance offers CLO

Eaton Vance Management plans to price $408.23 million of notes due Oct. 20, 2026 in the Eaton Vance CLO 2015-1 Ltd./Eaton Vance CLO 2015-1, LLC deal, according to a market source.

The offering includes $246 million of class A floating-rate notes (/AAA); $46.25 million of class B floating-rate notes; $34.35 million of class C deferrable floating-rate notes; $23.4 million of class D deferrable floating-rate notes; $18 million of class E deferrable floating-rate notes; $8 million of class F deferrable floating-rate notes and $32.23 million of subordinated notes.

Wells Fargo Securities LLC is the placement agent.

Eaton Vance will manage the CLO.

The CLO has a non-call period that ends Oct. 30, 2017. The reinvestment period ends July 20, 2020.

The deal is backed primarily by broadly syndicated senior secured loans.

Boston-based Eaton Vance Management, a subsidiary of Eaton Vance Corp., brought one deal in 2014 and one CLO offering in 2013.

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