Halcyon prices $405 million CLO refinancing; spreads flat in secondary market

By Cristal Cody

Tupelo, Miss., Oct. 16 – CLO primary and refinancing activity is expected to remain busy with a strong pipeline through the end of the year, according to a BofA Merrill Lynch research note released on Monday.

Year-to-date broadly syndicated and middle-market issuance totals $85.6 billion, the analysts said.

BofA Merrill Lynch analysts forecast about $100 billion of volume for the year.

Halcyon Loan Management, LLC announced on Friday that it priced a $405 million refinancing of vintage 2015 CLO notes.

In other activity, KCAP Financial, Inc. announced on Monday that subsidiary Trimaran Advisors, LLC will serve as investment manager for the previously reported $695.8 million refinancing and reset of the Catamaran CLO 2014-1 Ltd./Catamaran CLO 2014-1 LLC transaction that is expected to close on Friday.

“An affiliate of the investment manager is expected to retain a vertical strip to comply with U.S. risk retention,” KCAP said in the release.

The deal is being upsized from the original $467,925,000 offering priced in 2014.

MUFG is the refinancing placement agent.

The maturity on the refinanced notes will be extended to April 22, 2030 from the original April 20, 2026 maturity.

The refinanced CLO will have a 2.5-year non-call period and a five-year reinvestment period.

In the secondary market, CLO spreads ended Friday unchanged, according to BofA Merrill Lynch. AAAs were flat on the week at Libor plus 110 basis points, while BB-rated spreads were unchanged at Libor plus 775 bps.

Secondary market activity included $210 million of BWIC volume in the previous week, the analysts said.

“Spread levels remained firm amidst light supply across the stack,” the analysts said. “Interestingly, virtually all bonds traded with an above-par cover, even further down the stack at the BBB/BB level.”

Halcyon refinances CLO

Halcyon Loan Management sold $405 million of notes due April 20, 2027 in a refinancing of four tranches from a vintage 2015 CLO offering, according to a notice of revised proposed first supplemental indenture on Friday.

Halcyon Loan Advisors Funding 2015-1 Ltd./Halcyon Loan Advisors Funding 2015-1 LLC priced $310 million of class A-R senior secured floating-rate notes at Libor plus 92 bps in the senior tranche.

Morgan Stanley & Co. LLC was the refinancing placement agent.

Halcyon Loan Advisors 2015-1 LLC is the CLO manager.

The original CLO deal was issued on April 16, 2015.

Proceeds from the refinancing will be used to redeem the original class A, B-1, B-2 and C notes. The original CLO’s class D, class E, class F and subordinated notes will remain outstanding.

Halcyon has refinanced four dollar-denominated CLOs year to date.

The management firm is based in New York.

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