GSO/Blackstone markets $458.9 million CLO; secondary spreads remain strong in August

By Cristal Cody

Eureka Springs, Ark., Aug. 19 – GSO/Blackstone Debt Funds Management LLC is in the CLO deal pipeline with a $458.9 million offering, while CLO secondary market activity remains busy, according to sources on Friday.

“Primary supply has remained fairly light in August; seven deals have priced for a total of $3.1 billion,” Wells Fargo Securities, LLC analysts said in a note on Friday. “Issuance trails 2015 year-to-date issuance by 50%; sixty-three managers have priced a deal this year, compared to 80 year to date in 2015.”

In the secondary market on Thursday, 52 investment-grade CBO/CDO/CLO issues totaling $370.2 million and 36 non-investment-grade CBO/CDO/CLO securities totaling $227.82 million were traded, according to Trace.

“Secondary CLO spreads have continued their strong technical rally into August following low yields across credit, limited primary supply and higher demand for credit,” the Wells Fargo Securities analysts said. “Single-A spreads continue to be the most notable movers; the basis between AAA and single-A tranches is the tightest in our historical data series.”

CLO 2.0 AAAs were quoted in the secondary market 5 basis points tighter from a month ago in the Libor plus 145 bps area, while A-rated notes have come in 40 bps on the month to the Libor plus 260 bps area.

U.S. CLO BBs traded 50 bps tighter from a month ago in the Libor plus 775 bps area, according to the note.

GSO/Blackstone preps deal

GSO/Blackstone Debt Funds Management plans to price $458.9 million of notes due Oct. 20, 2027 in a U.S. CLO deal, according to a market source.

The Jay Park CLO Ltd./Jay Park CLO LLC offering includes $276.5 million of class A-1 senior secured floating-rate notes (Aaa/AAA); $53.5 million of class A-2 senior secured floating-rate notes (Aa1); $41 million of class B secured deferrable floating-rate notes (A2); $26.5 million of class C secured deferrable floating-rate notes (Baa3); $16.5 million of class D secured deferrable floating-rate notes (Ba3) and $44.9 million of subordinated notes.

Citigroup Global Markets Inc. is the placement agent.

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

GSO/Blackstone has priced one U.S. CLO offering year to date.

GSO/Blackstone brought six U.S. CLO deals and one refinancing transaction to market in 2015.

The New York City-based firm is a subsidiary of alternative asset manager GSO Capital Partners LP.

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