Ares prices $1.1 billion Ares XLIV CLO; deal supply strong; secondary market spreads flat

By Cristal Cody

Tupelo, Miss., July 17 – Ares Management LLC announced on Monday that it priced $1.1 billion of notes in its second largest CLO offering to date.

The deal is the CLO manager’s third new transaction of 2017.

“Supply continues to be strong in the primary market,” according to a BofA Merrill Lynch research note released on Monday.

Nearly $54 billion of new CLOs have priced year to date, the analysts said.

Secondary CLO market action picked up in the previous week, though spreads ended Friday flat across the capital stack, according to the note.

“BWIC volumes increased to $322 [million] after seeing only $9 [million] last week,” the analysts said. “Senior bonds remained well bid.”

CLO AAA spreads were unchanged on the week at Libor plus 115 basis points.

Ares brings third CLO

Ares Management priced $1.1 billion of notes due July 15, 2029 in the new Ares XLIV CLO Ltd./Ares XLIV CLO LLC transaction on Monday, according to a market source and a company news release.

The CLO primarily consisted of broadly syndicated first-lien senior secured U.S. bank loans, Ares said.

The Rule 144A and Regulation S deal was expected to initially include $567.5 million of class A-1 senior floating-rate notes (Aaa/AAA/); $92.5 million of class A-2 senior floating-rate notes (Aaa//); $95 million of class A-3 senior floating-rate notes (Aa2//); $55 million of class B senior floating-rate notes (A2//); $60 million of class C mezzanine deferrable floating-rate notes (Baa3//); $50 of class D mezzanine deferrable floating-rate notes (Ba3//); $6 million of class E mezzanine deferrable floating-rate notes (B3//) and $82 million of subordinated notes.

Final pricing details were not available by press time.

Goldman Sachs & Co. LLC was the underwriter.

Ares CLO Management II LLC is the CLO manager.

The notes are backed primarily by broadly syndicated senior secured corporate loans.

Ares Management has priced three new CLOs and refinanced three vintage CLOs year to date.

The Los Angeles-based alternative asset management firm priced two new CLOs and refinanced two vintage CLOs in 2016.

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