KKR resets $520.15 million CLO; refinancings continue at slower pace in second quarter

By Cristal Cody

Tupelo, Miss., June 13 – KKR Financial Advisors II, LLC priced $520.15 million of notes in a refinancing and reset of a vintage 2014 CLO deal, according to a market source on Tuesday.

Year to date, more than $83 billion of CLOs have been refinanced, sources report.

The refinancing wave has continued in the second quarter but at a slower pace than in the first quarter, Wells Fargo Securities, LLC analysts said in a note on Monday.

The analysts said that “nearly 50 deals have been refinanced or reset so far in Q2, and over 160 deals YTD.”

New CLO volume year to date totals $41 billion from 72 deals, “almost double the 2016 year-to-date volume,” the analysts said.

Primary spreads at the top of the capital structure have widened slightly month over month, while secondary spreads are flat to modestly tighter, the Wells Fargo analyst said.

“Current levels for primary and secondary spreads are still quite close to three-year tights,” the analysts said.

AAAs were quoted unchanged on the month at the Libor plus 113 basis points area. BB-rated spreads have tightened 60 bps month over month to the Libor plus 500 bps area, according to the note.

KKR resets KKR CLO 9

KKR Financial Advisors II sold $520.15 million of notes in a refinancing and reset of the KKR Financial CLO 9 Ltd./KKR Financial CLO 9 LLC transaction, according to a market source.

The CLO priced $320.7 million of senior secured floating-rate notes at Libor plus 127 bps in the class A-R tranche.

J.P. Morgan Securities LLC was the refinancing agent.

The maturity on the refinanced notes was extended to July 15, 2030 from the original Sept. 15, 2026 maturity.

In the original $518 million transaction that priced on Aug. 7, 2014, the CLO sold $306.25 million of class A senior secured floating-rate notes at Libor plus 147 bps.

The deal is collateralized primarily by broadly syndicated first-lien senior secured corporate loans.

KKR priced three new U.S. CLOs and refinanced one vintage U.S. CLO transaction in 2016.

The investment firm is a subsidiary of KKR Credit Advisors (US) LLC.

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