GoldenTree invests in portions of new euro CLO; primary action thins; CLO spreads mixed

By Cristal Cody

Tupelo, Miss., July 13 – CLO primary action remains light so far in July, market sources report.

No supply was seen last week, according to a BofA Securities, Inc. research note released on Monday.

Year to date, about $35 billion of dollar-denominated broadly syndicated CLOs and more than €10 billion of euro-denominated broadly syndicated CLOs have priced.

Meanwhile on Monday, GoldenTree Asset Management LP announced the closing of its previously reported €373.7 million GoldenTree Loan Management EUR CLO 4 DAC transaction.

The CLO sold €221 million of the AAA-rated class A floating-rate notes at Euribor plus 155 basis points.

The deal had an overall weighted average floating-rate coupon of Euribor plus 228 bps.

GoldenTree Loan Management II LP is the CLO manager.

The CLO was arranged by a bank syndicate including Morgan Stanley & Co. International plc as structuring lead, Barclays as co-lead and Wells Fargo Securities LLC as placement agent.

“The syndicate globally distributed the investment-grade rated notes and a portion of the lower rated notes issued by the CLO,” GoldenTree said in a release. “GLM invested in the CLO's equity and a majority of the lower rated notes.”

The CLO is backed by an 86% ramped €323 million portfolio of primarily senior secured loans as of closing and complies with European risk retention regulations.

GoldenTree said the CLO is the fourth European CLO it’s issued since 2017.

CLO AAAs flat

Looking at the dollar-denominated secondary market, $622 million of BWIC volume was seen last week, up from $372 million over the previous holiday week, BofA analysts said in the report.

AAA tranches made up 42% of the notional on lists.

“In general, the tone remains constructive on the week specifically for higher quality/top tier managed deals,” the analysts said. “Spreads were mostly range bound and ended up unchanged on the week.”

CLO AAA tranches were quoted flat Friday at a Libor plus 175 bps average.

BBB spreads were steady at a Libor plus 525 bps average.

Euro CLO spreads were unchanged to tighter in the secondary market, according to the report.

AAAs were stable at an Euribor plus 155 bps average.

Euro-denominated BBB tranches ended Friday 5 bps tighter on the week at a Euribor plus 465 bps average.

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