Dollar-denominated CLO primary supply slows; secondary market action remains busy

By Cristal Cody

Tupelo, Miss., June 29 – Dollar-denominated CLO primary market action is slowing ahead of the upcoming Independence Day holiday.

Year to date, more than $30 billion of dollar-denominated CLOs and more than €8 billion of euro-denominated CLOs have priced, market sources said.

Several deals are expected to price soon, according to market sources.

Secondary volume has been strong in the meantime across CLOs and other securitized securities.

BWIC volume totaled $1.4 billion last week, up from $1.2 billion in the prior week, BofA Securities, Inc. analysts said in a research note released on Monday.

CLO AAA notes made up 34% of the notional on lists.

“June's weekly BWIC volumes have all come in over $1 [billion], averaging about $1.3 [billion] each week and June saw about $1.7 [billion] more worth of bids than the month of May,” the analysts said.

CLO AAA-A spreads eased an average 5 basis points to 10 bps over the week, while BB spreads widened 25 bps on the week, according to the note.

AAAs were 5 bps wider at the Libor plus 175 bps average. CLO A-rated spreads eased 10 bps to the Libor plus 255 bps average going out on Friday.

BBB tranches were unchanged on the week at the Libor plus 525 bps average, while BB spreads widened 25 bps to the Libor plus 1,110 bps average.

“CLO spreads have retraced by 40-60% for mezz and 80% for the senior stack from their wides in March,” the BofA analysts said.

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